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Determinants of tax avoidance: Evidence from Indonesian mining industry

Author

Listed:
  • Umi Sulistiyanti
  • Aristianto Dwi Saputra

    (Department of Accounting, Universitas Islam Indonesia, Yogyakarta, Indonesia
    Department of Accounting, Universitas Islam Indonesia, Yogyakarta, Indonesia)

Abstract

Tax avoidance is one of the company strategies to alleviate the company's tax burden by minimizing the amount of tax that must be paid legally. The mining sector is the most vulnerable sector to practice tax avoidance because this sector gains large profits from the mining activities carried out. This study aims to empirically examine the influences of executive incentive, corporate risk, corporate governance, and accounting conservatism on tax avoidance. The research population of this study was mining companies listed in the Indonesia Stock Exchange (IDX) from 2012 to 2017 as many as 41 companies. These research samples were 5 companies or 30 observation data selected by purposive sampling method. The data used is secondary data which is then analyzed using multiple regression. The result of the research showed that audit quality and accounting conservatism had negatively significant effects on tax avoidance. Meanwhile, executive incentive, corporate risk, institutional ownership, independent commissioners, and audit committee did not effect on tax avoidance. Tax avoidance is one of the company strategies to alleviate the company's tax burden by minimizing the amount of tax that must be paid legally. The mining sector is the most vulnerable sector to practice tax avoidance because this sector gains large profits from the mining activities carried out. This study aims to empirically examine the influences of executive incentive, corporate risk, corporate governance, and accounting conservatism on tax avoidance. The research population of this study wasmining companies listed in the Indonesia Stock Exchange (IDX) from 2012 to 2017 as many as 41 companies. These research samples were 5 companies or 30 observation data selected by purposive sampling method. The data used is secondary data which is then analyzed using multiple regression. The result of the research showed that audit quality and accounting conservatism had negatively significant effects on tax avoidance. Meanwhile, executive incentive, corporate risk, institutional ownership, independent commissioners, and audit committee did not effecton tax avoidance.

Suggested Citation

  • Umi Sulistiyanti & Aristianto Dwi Saputra, 2020. "Determinants of tax avoidance: Evidence from Indonesian mining industry," Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol. 2(3), pages 165-174, August.
    • Handle: RePEc:uii:jcauii:v:2:y:2020:i:3:p:165-174
    DOI: 10.20885/jca.vol2.iss3.art5
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    References listed on IDEAS

    as
    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. Teodora Paligorova, 2010. "Corporate Risk Taking and Ownership Structure," Staff Working Papers 10-3, Bank of Canada.
    4. 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.
    5. Armstrong, Christopher S. & Blouin, Jennifer L. & Jagolinzer, Alan D. & Larcker, David F., 2015. "Corporate governance, incentives, and tax avoidance," Journal of Accounting and Economics, Elsevier, vol. 60(1), pages 1-17.
    6. Afuan Fajrian Putra & Amir Hakim bin Osman, 2019. "Tax Compliance Of Msme’S Taxpayer: Implementation Of Theory Of Planned Behavior," Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol. 1(1), pages 1-10, January.
    7. 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.
    8. 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.
    9. Armstrong, Christopher S. & Blouin, Jennifer L. & Jagolinzer, Alan D. & Larcker, David F., 2015. "Corporate Governance, Incentives, and Tax Avoidance," Research Papers 2134, Stanford University, Graduate School of Business.
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    More about this item

    Keywords

    Tax avoidance; executive incentive; corporate risk; corporate governance; accounting conservatism;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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