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The Impact of Profitability, Firm Size, and Leverage on Tax Avoidance: Moderating Role of Parent Company Location

Author

Listed:
  • Zaenal Fahmi
  • Eduard Ary Binsar Naibaho

Abstract

This study examines the effect of profitability, firm size, and leverage on tax avoidance. Additionally, the study investigates the moderating role of parent company location on the relationship between profitability, firm size, leverage, and tax avoidance. Using a sample of 504 observations from companies listed on the Indonesia Stock Exchange, excluding the financial and real estate sectors, and employing multiple linear regression analysis, this study finds that profitability negatively affects tax avoidance, firm size negatively affects tax avoidance, and leverage positively affects tax avoidance. The study also finds that parent company location strengthens the positive relationship between leverage and tax avoidance. The results of this study imply that leverage is a significant factor influencing corporate tax avoidance practices, and this effect is amplified by the presence of parent company location in the relationship between leverage and tax avoidance. Â JEL classification numbers: H25, H26, G32.

Suggested Citation

  • Zaenal Fahmi & Eduard Ary Binsar Naibaho, 2025. "The Impact of Profitability, Firm Size, and Leverage on Tax Avoidance: Moderating Role of Parent Company Location," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 15(3), pages 1-2.
    • Handle: RePEc:spt:admaec:v:15:y:2025:i:3:f:15_3_2
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    More about this item

    Keywords

    Profitability; Firm size; Leverage; Tax avoidance; Parent company.;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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