Financial constraints and corporate governance as moderating variables for the determinants of tax avoidance
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Author(s)Dica Lady SilveraLink to ORCID Index: https://orcid.org/0000-0003-0594-6391
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Achmad HizaziLink to ORCID Index: https://orcid.org/0000-0002-3470-4888
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M. Syurya HidayatLink to ORCID Index: https://orcid.org/0000-0002-9279-325X
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Sri RahayuLink to ORCID Index: https://orcid.org/0000-0002-9508-378X
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DOIhttp://dx.doi.org/10.21511/imfi.19(1).2022.21
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Article InfoVolume 19 2022, Issue #1, pp. 274-286
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- 1251 Views
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621 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The purpose of this study is to empirically investigate the effect of financial constraints and corporate governance as moderating variables on the determinants of tax avoidance, which includes foreign activity, corporate social responsibility, and political connections. All companies listed on the Indonesia Stock Exchange from 2017 to 2019 are the objects of this study. The panel data regression was used to address the research question. The findings show that foreign activity, corporate social responsibility, and political connections significantly affected tax avoidance with alpha 5%. The results also show that corporate governance can reduce the positive impact of foreign activity, corporate social responsibility, and political connection on tax avoidance with alpha 1%.
Moreover, financial constraints may strengthen the positive impact of corporate social responsibility on tax avoidance with alpha 5%. The findings further provide empirical evidence about one of the strategies businesses use to conduct tax avoidance, notably foreign activity, corporate social responsibility, and political connection. Thus, companies that implement good corporate governance could reduce corporate tax avoidance acts, which can harm the company’s image and lead to a decrease in company value. This study discovered a new proxy for measuring financial constraints, as well as developments in the political connection.
- Keywords
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JEL Classification (Paper profile tab)G30, H26, M41
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References90
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Tables5
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Figures0
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- Table 1. Regression results for Model 1
- Table 2. Regression results for Model 2
- Table A1. Companies with political connections
- Table B1. Financial constraint score
- Table C1. Descriptive statistics
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The relationship between corporate social responsibility and earnings management: accounting for endogeneity
Hyunjung Choi , Byungchul Choi ,
Jungyoon Byun
doi: http://dx.doi.org/10.21511/imfi.15(4).2018.06
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Does board composition have an impact on CSR reporting?
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doi: http://dx.doi.org/10.21511/ppm.15(2).2017.02
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Gideon Tayo Akinleye , Odunayo Olarewaju ,
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doi: http://dx.doi.org/10.21511/ppm.17(1).2019.02
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