THE EFFECT OF CORPORATE GOVERNANCE ON TAX AVOIDANCE (Study Manufacturing Company in Indonesia Stock Exchange Period 2014 - 2018)
Meida Listiyana (1*), Lies Zulfiati (2), H. Sharifuddin Husen (3)
Sekolah Tinggi Ilmu Ekonomi Indonesia, Jakarta
Abstract
This study aims to determine the effect of corporate governance proxied by the board of commissioners, audit committee and institutional ownership of tax avoidance behavior that occurs in manufacturing companies listed in Indonesia Stock Exchange. Tax avoidance in this study uses the residual method to obtain abnormal book tax difference variables which are regressed from non-discretionary items, namely the scale of investment in tangible and intangible fixed assets, economic growth, loss position and tax rate differences. The abnormal book tax difference residual value is obtained by categorizing manufacturing companies into several industry groups per year. Board of commissioners and audit committees are measured based on the characteristics of independence, activity, size and competence, institutional ownership is measured through the comparison of shares owned by institutions with outstanding shares. This study adds a control variable that is profitability proxied by return on assets, leverage and firm size. The research method used was panel data regression analysis using eviews 10. The sample was determined based on the purposive sampling method with the number of research samples obtained as many as 115 companies during the period 2014-2018. The results of this study indicate that: 1) the board of commissioners has no influence on tax avoidance behavior with a positive coefficient which means that when the effectiveness of the board of commissioners increases it will increase tax avoidance behavior, 2) the audit committee has a significant effect on tax avoidance behavior with a negative coefficient which means when the effectiveness of the audit committee increases it will reduce tax avoidance behavior, 3) institutional ownership has no effect on tax avoidance behavior with a negative coefficient which means when institutional ownership increases it will reduce tax avoidance behavior. The results of the control variable test show profitability affects the behavior of tax avoidance, leverage does not affect the behavior of tax avoidance and the size of the company does not affect the behavior of tax avoidance.
Keywords: Tax Avoidance, Corporate Governance, Boards of Commissioners, Audit Committee, Institutional Ownership, Profitability, Leverage, Company Size
Topic: Management Accounting