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Managerial and Financial Capabilities Become Determining Factors of Tax Avoidance Practice in Indonesia

Author

Listed:
  • Alamanda Rizka Hasanah

    (Department of Economic and Business, Universitas Pembangunan Nasional Veteran Jakarta, Jakarta, Indonesia)

  • Ni Putu Eka Widiastuti

    (Department of Economic and Business, Universitas Pembangunan Nasional Veteran Jakarta, Jakarta, Indonesia)

Abstract

Differences in interests related to taxation between the government and companies are still a current issue. The purpose of this study is to examine the impact of managerial and financial competencies on tax avoidance in Indonesian manufacturing companies. 149 financial statements of companies listed on the Indonesia Stock Exchange were used to compile the data. Panel data regression with a random-effects model was used to test and analyze the data. The findings revealed that financial challenges and managerial ability had a detrimental impact on tax avoidance, but there was no influence between the audit committee on tax avoidance. As for the control variable, there is a positive influence between profitability on tax avoidance, and there is no influence between leverage on tax avoidance.

Suggested Citation

  • Alamanda Rizka Hasanah & Ni Putu Eka Widiastuti, 2022. "Managerial and Financial Capabilities Become Determining Factors of Tax Avoidance Practice in Indonesia," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 11(1), pages 207-219, January.
    • Handle: RePEc:rbs:ijfbss:v:11:y:2022:i:1:p:207-219
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    References listed on IDEAS

    as
    1. Allison Koester & Terry Shevlin & Daniel Wangerin, 2017. "The Role of Managerial Ability in Corporate Tax Avoidance," Management Science, INFORMS, vol. 63(10), pages 3285-3310, October.
    2. Peter Demerjian & Baruch Lev & Sarah McVay, 2012. "Quantifying Managerial Ability: A New Measure and Validity Tests," Management Science, INFORMS, vol. 58(7), pages 1229-1248, July.
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