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The Impact of Institutional Ownership and a Firm's Size on Firm Value: Tax Avoidance as a Moderating Variable

Author

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  • Vince Ratnawati

    (Economic Faculty, Universitas Riau, Pekanbaru, Indonesia Author-2-Name: Azhari.S Author-2-Workplace-Name: Economic Faculty, Universitas Riau, Pekanbaru, Indonesia Author-3-Name: Desmond Freddy Author-3-Workplace-Name: Economic Faculty, Universitas Riau, Pekanbaru, Indonesia Author-4-Name: Nita Wahyuni Author-4-Workplace-Name: Economic Faculty, Universitas Riau, Pekanbaru, Indonesia)

Abstract

"Objective �The objective of this study is to investigate how institutional ownership and firm size affect firm value. The study also investigates the moderating effect of tax avoidance on the relationship between institutional ownership and the size of a firm on its value. Methodology/Technique �A model was developed and tested using a sample of 66 manufacturing companies listed on the Indonesian Stock Exchange between 2012 and 2014. Findings �The data was collected and analysed using a least square regression and moderated regression analysis. The analysis shows that institutional ownership and firm size affect firm value. The results also indicate that tax avoidance moderates the effect of institutional ownership and that of a firm's size on its value"

Suggested Citation

  • Vince Ratnawati, 2018. "The Impact of Institutional Ownership and a Firm's Size on Firm Value: Tax Avoidance as a Moderating Variable," GATR Journals jfbr140, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:jfbr140
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    References listed on IDEAS

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    1. 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.
    2. Jeffrey W. Allen & Gordon M. Phillips, 2000. "Corporate Equity Ownership, Strategic Alliances, and Product Market Relationships," Journal of Finance, American Finance Association, vol. 55(6), pages 2791-2815, December.
    3. Mihir A Desai & Dhammika Dharmapala, 2009. "Corporate Tax Avoidance and Firm Value," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 537-546, August.
    4. Patricia M. Dechow & Richard G. Sloan & Amy P. Sweeney, 1996. "Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC," Contemporary Accounting Research, John Wiley & Sons, vol. 13(1), pages 1-36, March.
    5. Popoola, Oluwatoyin Muse Johnson & Ratnawati, Vince & Hamid, Mohamad Ali Abdul, 2016. "The interaction effect of Institutional Ownership and Firm Size on the relationship between Managerial Ownership and Earnings Management," MPRA Paper 75943, University Library of Munich, Germany.
    6. Armstrong, Christopher S. & Guay, Wayne R. & Weber, Joseph P., 2010. "The role of information and financial reporting in corporate governance and debt contracting," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 179-234, December.
    7. Cornett, Marcia Millon & Marcus, Alan J. & Tehranian, Hassan, 2008. "Corporate governance and pay-for-performance: The impact of earnings management," Journal of Financial Economics, Elsevier, vol. 87(2), pages 357-373, February.
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    Cited by:

    1. Asaad Mohammed Ali Wahhab & Murtadha Hasan Khlaif, 2022. "The Effect of Ownership Structure and Audit Quality in Producing High-Quality Financial Statements - Evidence from the Iraq Stock Exchange," Technium Social Sciences Journal, Technium Science, vol. 34(1), pages 13-31, August.

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    More about this item

    Keywords

    Institutional Ownership; Firm Size; Tax Avoidance; Firm Value;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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