Tax Avoidance and Corporate Risk in Indonesia: The Role of Tax Risk and Executive Characteristics
DOI:
https://doi.org/10.26740/akunesa.v13n1.p62-72Keywords:
tax avoidance, corporate risk, tax riskAbstract
This study aims to examine the impact of tax avoidance on corporate risk, utilizing tax risk and executive characteristics as moderating factors. Those in executive positions are perceived to exert influence over their decisions, including those pertaining to the avoidance of taxes, which could be considered a risky decision. The study utilizes ten years of data to analyze the long-term tax avoidance patterns of non-financial Indonesian companies. The findings reveal that over the long run, tax avoidance practices can amplify a corporate's risk, and that tax risk and executive characteristics have been shown to intensify the impact of tax avoidance on corporate risk.
References
Baghdadi, G., Podolski, E. J., & Veeraraghavan, M. (2022). CEO risk-seeking and corporate tax avoidance: Evidence from pilot CEOs. Journal of Corporate Finance, 76, 102282. https://doi.org/10.1016/J.JCORPFIN.2022.102282
Balakrishnan, K., Blouin, J., & Guay, W. (2019). Tax Aggressiveness and Corporate Transparency. The Accounting Review, 94(1), 45–69.
Cao, Y., Feng, Z., Lu, M., & Shan, Y. (2021). Tax Avoidance And Firm Risk: Evidence From China. Accounting & Finance, 61(3), 4967–5000.
Carolina, V., & Oktavianti, O. (2021). The Best Measurement of Tax Aggressiveness in Predicting Corporate Risk. Riset Akuntansi Dan Keuangan Indonesia, 6(3), 310–318.
Chen, S., Chen, X., Cheng, Q., & Shevlin, T. (2010). Are Family Firms More Tax Aggressive Than Non Family Firms? Journal of Financial Economics, 95(1), 41–61.
Chowdhury, R., Doukas, J.A., & Mandal, S. (2023). CEO Risk Preferences, Hedging Intensity, and Firm Value. Journal of International Money and Finance, 130, 1–24.
Cozmeia, C. & Uerbana, E. C. (2014). Risk Management Triggers: From The Tax Risk Pitfalls To Organizational Risk. Procedia Economics and Finance, 15, 1594–1602.
Desai, M. A., & Dharmapala, D. (2006). Corporate Tax Avoidance and High-Powered Incentives. Journal of Financial Economics, 79(1), 145–179.
Desai, M. A., & Dharmapala, D. (2009). Corporate Tax Avoidance and Firm Value. The Review of Economics and Statistics, 91(3), 537–546.
Dhawan, A., Ma, L., & Kim, M. H. (2020). Effect of corporate tax avoidance activities on firm bankruptcy risk. Journal of Contemporary Accounting & Economics, 16(2), 100187. https://doi.org/10.1016/J.JCAE.2020.100187
Dyreng, S., Hanlon, M., & Maydew, E. L. (2008). Long-Run Corporate Tax Avoidance. The Accounting Review, 83(1), 61–82.
Dyreng, S., Hanlon, M., & Maydew, E. L. (2010). The Effects of Executives on Corporate Tax Avoidance. The Accounting Review, 85(4), 1163–1189.
Dyreng, S., Hanlon, M., & Maydew, E. L. (2019). When Does Tax Avoidance Result in Tax Uncertainty? The Accounting Review, 94(2), 179–203.
Eisenhardt, K. M. (1989). Agency Theory: an Assessment and Review. The Academy of Management Review, 1(1), 57–74.
Frank, M.M., Lynch, L. & Rego, S. (2009). Tax Reporting Aggressiveness and Its Relation to Aggressive Financial Reporting. The Accounting Review, 84(2), 467–496.
Gallemore, J., Maydew, E.L., & Thornock, J. R. (2014). The Reputational Costs of Tax Avoidance. Contemporary Accounting Research, 31(4), 1103–1133.
García-Meca, E., Ramon-Llorens, M.C., Martínez-Ferrero, J. (2021). Are Narcissistic Ceos More Tax Aggressive? The Moderating Role Of Internal Audit Committees. Journal of Business Research, 129, 223–235.
Ginting, R.I.S., & Martani, D. (2017). Analysis of Tax Aggressiveness and Financial Reporting Aggressiveness on Public Companies in Indonesia 2010-2014. International Accounting Conference.
Gracelia, S., & Tjaraka, H. (2020). Managerial Ownership Moderates The Effect Of Executive Risk Preference And Gender Diversity On Tax Avoidance. Journal Of Security And Sustainability Issues, 10, 484–495.
Guenther, D.A., Matsunaga, S.R., & Williams, B. M. (2017). Is Tax Avoidance Related to Firm Risk? The Accounting Review, 92(1), 115–136.
Hanlon, M., & Heitzman, S. (2010). A Review of Tax Research. Journal of Accounting and Economics, 50(40), 127–178.
Hanlon, M., & Slemrod, J. (2009). What Does Tax Aggressiveness Signal? Evidence from stock price reactions to news about tax shelter involvement. Journal of Public Economics, 93, 126–141.
Hutchens, M., & Rego, S. (2015). Does Greater Tax Risk Lead to Increased Firm Risk?
Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Cost and Ownership Structure. Journal of Financial Economics, 3(4), 305–360.
Kim, J. B., Li, Y., & Zhang, L. (2011). Corporate Tax Avoidance and Stock Price Crash Risk: Firm-Level Analysis. Journal of Financial Economics, 100(3), 639–662.
Lewellen, K. (2003). Financing Decisions When Managers Are Risk Averse. Journal of Financial Economics, 82(3), 551–589.
Lim, Y. D. (2011). Tax Avoidance, Cost of Debt and Shareholder Activism: Korean Evidence. Journal of Banking & Finance, 35, 456–470.
MacCrimmon, K.R. & Wehrung, D. A. (1990). Charateristics of Risk Taking Executives. Management Science, 36(4), 422–435.
Neuman, Stevanie S. and Omer, Thomas C. and Schmidt, A. P. (2013). Risk and Return: Does Tax Risk Reduce Firms’ Effective Tax Rates? American Taxation Association Midyear Meeting. https://ssrn.com/abstract=2216878
Paligorova, T. (2010). Corporate Risk Taking and Ownership Structure.
Redaksi DDTC News. (2023). WP Lapor Rugi Fiskal 3 Tahun Berturut-turut? Menkeu Bisa Lakukan Ini. https://news.ddtc.co.id/wp-lapor-rugi-fiskal-3-tahun-berturut-turut-menkeu-bisa-lakukan-ini-44828
Rego, S.O., & Wilson, R. (2012). Equity Risk Incentives And Corporate Tax Aggressiveness. Journal of Accounting Research, 50(3), 775–810.
Solimun. (2011). Analisis Variabel Moderasi dan Mediasi. Program Studi Statistika FMIPA Universitas Brawijaya.
Spence, M. (1973). Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355–374.
Thai, H.M., Dang, K.N., Nor, N.M., Nguyen, H.T., & Nguyen, K. . (2023). Corporate Tax Avoidance And Stock Price Crash Risk: The Moderating Effects Of Corporate Governance. International Journal of Emerging Markets.
Xu, L. (2023). CEO Greed And Corporate Tax Avoidance. Journal Of Strategy And Management.
Yuwono, A. & Mustikasari, E. (2022). The Effect Of Tax Avoidance And Tax Risk On Firm Risk. The Indonesian Accounting Review, 12(2), 223–230.
Downloads
Published
How to Cite
Issue
Section
Abstract views: 7
,
PDF Downloads: 5
