Does capital intensity, inventory intensity, firm size, firm risk, and political connections affect tax aggressiveness?

Authors

  • Sugeng Sugeng Department of Accounting, Faculty of Economics, Universitas Nusantara PGRI Kediri, Kediri
  • Eko Prasetyo Department of Accounting, Faculty of Economics and Business, Universitas Kahuripan Kediri
  • Badrus Zaman Department of Accounting, Faculty of Economics, Universitas Nusantara PGRI Kediri, Kediri

DOI:

https://doi.org/10.31106/jema.v17i1.3609

Keywords:

Capital Intensity, Inventory Intensity, Firm Size, Firm Risk, Political Connection, Tax Aggressiveness

Abstract

Tax aggressiveness is one of a critical issue in the world of taxation. Many companies do tax planning to minimize their tax abilities. This study aims to examine how capital intensity, inventory intensity, firm size, firm risk, and political connections, relate to the tax aggressiveness of manufacturing listed companies in Indonesia, an emerging economy of Southeast Asia. This study combined the tax aggressiveness factor from different perspectives into one model. This study used purposive sampling with manufacturing companies listed in Indonesia Stock Exchange during 2015-2017 and experienced a consecutive profit as the main criteria. Panel data regression used as a data analysis technique. The result shows that there is a significant effect between capital intensity, political connection, and tax aggressiveness. The relationship between inventory intensity, firm size, firm risk, and tax aggressiveness failed to prove in this study. This result is consistent across several measures of tax aggressiveness.

References

Abdul Wahab, E. A., Ariff, A. M., Madah Marzuki, M., & Mohd Sanusi, Z. (2017). Political connections, corporate governance, and tax aggressiveness in Malaysia. Asian Review of Accounting, 25(3), 424–451. https://doi.org/10.1108/ARA-05-2016-0053

Adhikari, A., Derashid, C., & Zhang, H. (2006). Public policy, political connections, and effective tax rates: Longitudinal evidence from Malaysia. Journal of Accounting and Public Policy, 25(5), 574–595. https://doi.org/10.1016/j.jaccpubpol.2006.07.001

Allen, A., Francis, B. B., Wu, Q., & Zhao, Y. (2016). Analyst coverage and corporate tax aggressiveness. Journal of Banking & Finance, 73, 84–98. https://doi.org/10.1016/j.jbankfin.2016.09.004

Ann, S., & Manurung, A. H. (2019). The Influence of Liquidity,Profitability,Intensity Inventory,Related Party Debt,And Company Size To Aggressive Tax Rate. Archives of Business Research, 7(3), 105–115. https://doi.org/10.14738/abr.73.6319

Bliss, M. A., & Gul, F. A. (2012). Political connection and cost of debt: Some Malaysian evidence. Journal of Banking & Finance, 36(5), 1520–1527. https://doi.org/10.1016/j.jbankfin.2011.12.011

Carolina, V., Natalia, M., & Debbianita, D. (2014). Karakteristik eksekutif terhadap tax avoidance dengan leverage sebagai variabel intervening. Jurnal Keuangan Dan Perbankan, 18(3), 409–419.

Chang, C.-S., Yu, S.-W., & Hung, C.-H. (2015). Firm risk and performance: The role of corporate governance. Review of Managerial Science, 9(1), 141–173. https://doi.org/10.1007/s11846-014-0132-x

Devi, M. N., Salim, A. S. A., & Pheng, L. K. (2018). The impact of firm characteristics on corporate tax aggressiveness: A study on malaysian public listed companies. Advanced Science Letters, 24(4), 2208–2212. https://doi.org/10.1166/asl.2018.10918

Dunbar, A., Higgins, D. M., Phillips, J. D., & Plesko, G. A. (2010). What do measures of tax aggressiveness measure ? In National Tax Association Proceedings (pp. 18–26).

Firmansyah, A., & Muliana, R. (2018). The effect of tax avoidance and tax risk on corporate risk. Jurnal Keuangan Dan Perbankan, 22(4), 643–656. https://doi.org/10.26905/jkdp.v22i4.2237

Guenther, D. A., Matsunaga, S. R., & Williams, B. M. (2017). Is tax avoidance related to firm risk? The Accounting Review, 92(1), 115–136. https://doi.org/10.2308/accr-51408

Halioui, K., Neifar, S., & Ben Abdelaziz, F. (2016). Corporate governance, CEO compensation and tax aggressiveness. Review of Accounting and Finance, 15(4), 445–462. https://doi.org/10.1108/RAF-01-2015-0018

Kim, C. F., & Zhang, L. (2016). Corporate political connections and tax aggressiveness. Contemporary Accounting Research, 33(1), 78–114. https://doi.org/10.1111/1911-3846.12150

Kim, J. H., & Im, C. C. (2017). The study on the effect and determinants of small - and medium-sized entities conducting tax avoidance. Journal of Applied Business Research (JABR), 33(2), 375–390. https://doi.org/10.19030/jabr.v33i2.9911

Lanis, R., & Richardson, G. (2012). Corporate social responsibility and tax aggressiveness: An empirical analysis. Journal of Accounting and Public Policy, 31(1), 86–108. https://doi.org/10.1016/j.jaccpubpol.2011.10.006

Lietz, G. M. (2013). Tax avoidance vs. Tax aggressiveness: a unifying conceptual framework. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2363828

Lubatkin, M., & Chatterjee, S. (1994). Extending modern portfolio theory into the domain of corporate diversification: Does it apply? Academy of Management Journal, 37(1), 109–136. https://doi.org/10.5465/256772

Nugraha, M. I., & Mulyani, S. D. (2019). Peran leverage sebagai pemediasi pengaruh karakter eksekutif, kompensasi eksekutif, capital intensity, dan sales growth terhadap tax avoidance. Jurnal Akuntansi Trisakti, 6(2), 301-324. https://doi.org/10.25105/jat.v6i2.5575

Nurfauzi, R., & Firmansyah, A. (2018). Managerial ability, management compensation, bankruptcy risk, tax aggressiveness. Media Riset Akuntansi, Auditing & Informasi, 18(1), 75. https://doi.org/10.25105/mraai.v18i1.2775

Nurhayati, Didik, S., & Luk, L. F. (2019). The effect of financial policy on tax aggressiveness for manufacturing companies listed at indonesia stock exchange. Modern Economics, 13(1), 180–186. https://doi.org/10.31521/modecon.V13(2019)-28

Paligorova, T., & Santos, J. A. C. (2017). Monetary policy and bank risk-taking: Evidence from the corporate loan market. Journal of Financial Intermediation, 30, 35–49. https://doi.org/10.1016/j.jfi.2016.11.003

Richardson, G., & Lanis, R. (2007). Determinants of the variability in corporate effective tax rates and tax reform: Evidence from Australia. Journal of Accounting and Public Policy, 26(6), 689-704. https://doi.org/10.1016/j.jaccpubpol.2007.10.003

Richardson, G., Taylor, G., & Lanis, R. (2016). Women on the board of directors and corporate tax aggressiveness in Australia An empirical analysis. Accounting Research Journal, 29(3), 313-331.. https://doi.org/10.1108/ARJ-09-2014-0079

Rusydi, M. K. (2013). Pengaruh ukuran perusahaan terhadap aggressive tax avoidance di indonesia. Jurnal Akuntansi Multiparadigma, 4(2), 323-329. https://doi.org/10.18202/jamal.2013.08.7200

Sari, D., & Tjen, C. (2016). Corporate social responsibility disclosure, environmental performance, and tax aggressiveness. International Research Journal of Business Studies, 9(2), 93–104. https://doi.org/10.21632/irjbs.9.2.93-104

Savitri, D. A. M., & Rahmawati, I. N. (2017). Pengaruh leverage, intensitas persediaan, intensitas aset tetap, dan profitabilitas terhadap agresivitas pajak. Jurnal Ilmu Manajemen Dan Akuntansi Terapan, 8(2), 19–32. Retrieved from http://203.190.115.143/jurnal.stietotalwin.ac.id/index.php/jimat/article/view/142

Sonia, S., & Suparmun, H. (2019). Factors influencing tax avoidance. In 5th Annual International Conference on Accounting Research (AICAR 2018).

Stickney, C. P., & McGee, V. E. (1982). Effective corporate tax rates the effect of size, capital intensity, leverage, and other factors. Journal of Accounting and Public Policy, 1(2), 125–152. https://doi.org/10.1016/S0278-4254(82)80004-5

Subadriyah, S., & Aliyah, S. (2018). The differences of taxpayer compliance before and after tax amnesty stimulus. JEMA: Jurnal Ilmiah Bidang Akuntansi Dan Manajemen, 15(2), 98-107. https://doi.org/10.31106/jema.v15i2.1024

Wu, W., Wu, C., Zhou, C., & Wu, J. (2012). Political connections, tax benefits and firm performance: Evidence from China. Journal of Accounting and Public Policy, 31(3), 277-300. https://doi.org/10.1016/j.jaccpubpol.2011.10.005

Ying, T., Wright, B., & Huang, W. (2017). Ownership structure and tax aggressiveness of Chinese listed companies. International Journal of Accounting & Information Management, 25(3), 313–332. https://doi.org/10.1108/IJAIM-07-2016-0070

Ying, Z. (2011). Ownership Structure, Board Characteristics and Tax Aggressiveness. Search. https://doi.org/10.1523/JNEUROSCI.3318-15.2016

Downloads

Additional Files

Published

2020-03-17

How to Cite

Sugeng, S., Prasetyo, E., & Zaman, B. (2020). Does capital intensity, inventory intensity, firm size, firm risk, and political connections affect tax aggressiveness?. JEMA: Jurnal Ilmiah Bidang Akuntansi Dan Manajemen, 17(1), 78–87. https://doi.org/10.31106/jema.v17i1.3609

Issue

Vol. 17 No. 1 (2020): JEMA: Jurnal Ilmiah Bidang Akuntansi dan Manajemen

Section

Articles

License

Copyright (c) 2020 JEMA: Jurnal Ilmiah Bidang Akuntansi dan Manajemen

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.