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Profitability, capital intensity and tax avoidance in Indonesia: The effect board of commissioners' competencies

Author

Listed:
  • Yoseph Togu Marsahala
  • Dianwicaksih Arieftiara
  • Noegrahini Lastiningsih

    (Department of Accounting, Universitas Pembangunan Nasional Veteran Jakarta, Jakarta, Indonesia
    Department of Accounting, Universitas Pembangunan Nasional Veteran Jakarta, Jakarta, Indonesia
    Department of Accounting, Universitas Pembangunan Nasional Veteran Jakarta, Jakarta, Indonesia)

Abstract

This study aims to research the impact of profitability and capital intensity on tax avoidance moderating with the competence of the board of commissioners. Focus of the study is manufacturing companies listed on Indonesia Stock Exchange for 2016-2018 period. The sampling technique was purposive sampling procedure, and hypotheses testing with regression panel data analysis using STATA version 13 application. The results indicate that profitability has a significant effect on tax avoidance, however, capital intensity has no significant effect on tax avoidance. This study documented that the competence of the board of commissioners weaken the effect of profitability on tax avoidance, however, the study failed to document the moderating role of the competence of commissioners on the effect of capital intensity on tax avoidance. This study contributes on enhance the empirical evidence that if companies have a competent board of commissioners, it can monitor managers' tax avoidance activities, thus managers will decrease the intensity of tax avoidance based on company profitability.

Suggested Citation

  • Yoseph Togu Marsahala & Dianwicaksih Arieftiara & Noegrahini Lastiningsih, 2020. "Profitability, capital intensity and tax avoidance in Indonesia: The effect board of commissioners' competencies," Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol. 2(3), pages 129-140, August.
    • Handle: RePEc:uii:jcauii:v:2:y:2020:i:3:p:129-140
    DOI: 10.20885/jca.vol2.iss3.art2
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    References listed on IDEAS

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    1. Astrid Faradisty & Eka Hariyani & Meilda Wiguna, 2019. "The effect of corporate social responsibility, profitability, independent commissioners, sales growth and capital intensity on tax avoidance," Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol. 1(3), pages 153-160.
    2. Neni Meidawati & Muhammad Nurul Azmi, 2019. "Factors Influencing The Compliance Of Taxpayers," Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol. 1(1), pages 26-37, January.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. Astrid Faradisty & Eka Hariyani & Meilda Wiguna, 2019. "The Effect Of Corporate Social Responsibility, Profitability, Independent Commissioners, Sales Growth And Capital Intensity On Tax Avoidance," Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol. 1(3), pages 153-160, May.
    5. Neni Meidawati & Muhammad Nurul Azmi, 2019. "Factors influencing the compliance of taxpayers," Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol. 1(1), pages 26-37.
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    More about this item

    Keywords

    Profitability; capital intensity; competence of commissioner's board; tax avoidance;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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