IDEAS home Printed from https://ideas.repec.org/p/gtr/gatrjs/jfbr137.html
   My bibliography  Save this paper

Earnings Management, Corporate Governance and Tax Avoidance: The Case in Indonesia

Author

Listed:
  • Lulus Kurniasih

    (Sebelas Maret, Surakarta, Indonesia Author-2-Name: Sulardi Author-2-Workplace-Name: Universitas Sebelas Maret, Surakarta, Indonesia Author-3-Name: Sri Suranta Author-3-Workplace-Name: Universitas Sebelas Maret, Surakarta, Indonesia)

Abstract

Objective � This study aims to determine the effect of earning management and corporate governance mechanisms on corporate tax avoidance. Methodology/Technique � Corporate governance mechanisms use institutional ownership, the size of the board of commissioners, the percentage of independent commissioners, auditing committees, and audit quality as proxies. Meanwhile, earnings management uses the modified Jones model. The sample of this study includes non-financial companies that are listed on the Indonesian Stock Exchange (IDX) between 2014 and 2016. Findings � Corporate tax avoidance can be detected by using the effective tax rate (ETR), which is the ratio of income to tax expenses. This sample was chosen using a purposive sampling method, resulting in 871 firms. The results suggest that earnings management has a significant impact on ETR. Novelty � This study identifies that only independent commissioners and audit quality have a significant influence on ETR.

Suggested Citation

  • Lulus Kurniasih, 2017. "Earnings Management, Corporate Governance and Tax Avoidance: The Case in Indonesia," GATR Journals jfbr137, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:jfbr137
    as

    Download full text from publisher

    File URL: http://gatrenterprise.com/GATRJournals/pdf_files/JFBR%20Vol%202(4)oct-dec%202017/4.%20Lulus%20Kurniasih.pdf
    Download Restriction: http://gatrenterprise.com/GATRJournals/online_submission.html
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lanis, Roman & Richardson, Grant, 2011. "The effect of board of director composition on corporate tax aggressiveness," Journal of Accounting and Public Policy, Elsevier, vol. 30(1), pages 50-70, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Meidijati Meidijati & Yvonne Augustine, 2022. "The Effect of Tax Accounting, Green Accounting, and Carbon Accounting on Environmental, Social, and Governance Performance: Moderated by Green Intellectual Capital," Technium Social Sciences Journal, Technium Science, vol. 31(1), pages 371-387, May.
    2. Fangjun Wang & Shuolei Xu & Junqin Sun & Charles P. Cullinan, 2020. "Corporate Tax Avoidance: A Literature Review And Research Agenda," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 793-811, September.
    3. Andrea Vacca & Antonio Iazzi & Demetris Vrontis & Monica Fait, 2020. "The Role of Gender Diversity on Tax Aggressiveness and Corporate Social Responsibility: Evidence from Italian Listed Companies," Sustainability, MDPI, vol. 12(5), pages 1-14, March.
    4. Grahame Dowling, 2014. "The Curious Case of Corporate Tax Avoidance: Is it Socially Irresponsible?," Journal of Business Ethics, Springer, vol. 124(1), pages 173-184, September.
    5. Mai, Nhat Chi, 2020. "Related Party Transactions, State Ownership, the Cost of Corporate Debt, and Corporate Tax Avoidance: Evidence from Vietnam," OSF Preprints y5qj3, Center for Open Science.
    6. K. Hung Chan & Phyllis L. L. Mo & Amy Y. Zhou & Steven Cahan, 2013. "Government ownership, corporate governance and tax aggressiveness: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(4), pages 1029-1051, December.
    7. Roman Lanis & Grant Richardson & Brett Govendir & Gregory Pazmandy, 2021. "The effect of board of directors’ expertise and tax avoidance on corporate debt," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(3), pages 4475-4511, September.
    8. Kovermann, Jost & Velte, Patrick, 2019. "The impact of corporate governance on corporate tax avoidance—A literature review," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 36(C), pages 1-1.
    9. Ahmed Boussaidi & Mounira Sidhom Hamed, 2015. "The impact of governance mechanisms on tax aggressiveness: Empirical evidence from Tunisian context," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 5(1), pages 1-12, January.
    10. Arie Pratama, 2020. "Corporate governance, foreign operations and transfer pricing practice: the case of Indonesian manufacturing companies," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 24(2), pages 185-200.
    11. Chen, Jie & Mishra, Tapas & Song, Wei & Zhang, Qingjing & Zhang, Zhuang, 2024. "The impact of bank mergers on corporate tax aggressiveness," Journal of Corporate Finance, Elsevier, vol. 84(C).
    12. Steijvers, Tensie & Niskanen, Mervi, 2014. "Tax aggressiveness in private family firms: An agency perspective," Journal of Family Business Strategy, Elsevier, vol. 5(4), pages 347-357.
    13. Issam Laguir & Raffaele Staglianò, 2014. "How do powerful CEOs manage corporate tax aggressiveness?," Economics Bulletin, AccessEcon, vol. 34(3), pages 1361-1368.
    14. Abdul Wahab, Nor Shaipah & Ntim, Collins G. & Mohd Adnan, Mohd Muttaqin & Tye, Wei Ling, 2018. "Top management team heterogeneity, governance changes and book-tax differences," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 32(C), pages 30-46.
    15. Inga Hardeck & Rebecca Hertl, 2014. "Consumer Reactions to Corporate Tax Strategies: Effects on Corporate Reputation and Purchasing Behavior," Journal of Business Ethics, Springer, vol. 123(2), pages 309-326, August.
    16. Leung, Sidney C.M. & Richardson, Grant & Taylor, Grantley, 2019. "The effect of the general anti-avoidance rule on corporate tax avoidance in China," Journal of Contemporary Accounting and Economics, Elsevier, vol. 15(1), pages 105-117.
    17. Imuetinyan EGUAVOEN & Isaac UKARIN & Ojuye Thomas ENEWEROME, 2023. "Board Attributes and Tax Planning of Corporate Organisations in Nigeria," Management and Economics Review, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 8(1), pages 46-57, February.
    18. Evangelos Chytis & Stergios Tasios & Ioannis Filos, 2020. "The effect of corporate governance mechanisms on tax planning during financial crisis: an empirical study of companies listed on the Athens stock exchange," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(1), pages 30-38, March.
    19. Roman Lanis & Grant Richardson & Grantley Taylor, 2017. "Board of Director Gender and Corporate Tax Aggressiveness: An Empirical Analysis," Journal of Business Ethics, Springer, vol. 144(3), pages 577-596, September.
    20. Pi‐Han Tsai & Yongzheng Liu & Xin Liu, 2021. "Collusion, political connection, and tax avoidance in China," Kyklos, Wiley Blackwell, vol. 74(3), pages 417-441, August.

    More about this item

    Keywords

    Tax Avoidance; Earnings Management; Corporate Governance; Effective Tax Rate; Audit Quality.;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gtr:gatrjs:jfbr137. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Dr. Abd Rahim Mohamad (email available below). General contact details of provider: http://gatrenterprise.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.