Can Tax Avoidance Be a Moderator in the Relationship Between Earnings Management and Firm Value?

This study aims to examine and assess the influence of Profitability and tax avoidance to Firm Value to Implementation of Earnings Management as an intervening variable (Empirical Study on Manufacturing Companies Listed on Indonesia Stock Exchange for the period 2013 – 2017). The data used in this research is secondary data in the form of annual report and audit report as of December 31. The research data was taken from the official website of Indonesia Stock Exchange and the website of each company. The population in this research were 225 companies with a study period of 2013 to 2017. The sample used as many as 45 manufacturing companies listed on the Indonesia Stock Exchange (BEI) in 2013 – 2017. The samples using purposive technique. These results indicate that profitability and tax avoidance had a positive significant effect on firm value. Profitability had a positive significant effect on earning management. Tax avoidance have no influence on earning managements. Earning management has no influence on firm value. Earning management does not mediate the relationship between profitability and tax avoidance with an intervening test pass. Keywords: Profitability, Tax Avoidance, Firm Value, Earning Managements DOI : 10.7176/EJBM/11-27-04 Publication date :September 30 th 2019

Abstract. This research is aimed to provide empirical evidence about relationship between political connection, foreign activity, and real earnings management on tax avoidance. Hanlon Heitzman (2010) defines tax avoidance as a continuum tax planning strategis to reduce the explicit taxes. Using purposive sampling, this research selects manufacturing companies that are listed in Indonesian Stock Exchange (IDX) in the period 2010-2015 as samples. Selected company data amounted to 65, so the total observation in this study are 365 firm-years. The data examination in this study uses multiple regression analysis with dated panel.The results of this study indicate that real earnings management has no significant effect on tax avoidance. These results mean that real earnings management conducted by the company can not detect tax avoidance activities undertaken by manufacturing firms in IDX. Meanwhile, political connections have a significant positive effect on tax avoidance, meaning that the average company uses its political connections to lower tax payments. Furthermore, a branch or subsidiary-like company can be used by companies to avoid more taxes by utilizing foreign activities stick to them to reduce taxes through profit shifting schemes as well as profit holding as evidenced by a significant positive effect. Keywords: earnings management; foreign activity; political connection; tax avoidance. Abstrak. Penelitian ini bertujuan untuk memberikan bukti empiris terkait hubungan antara koneksi politik, aktivitas luar negeri, dan manajemen laba riil terhadap praktik penghindaran pajak. Hanlon Heitzman (2010) mendefinisikan penghindaran pajak sebagai perencanaan pajak yang kontinu untuk mengurangi pajak eksplisit. Dengan menggunakan metode purposive sampling, penelitian ini memilih perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia (BEI) pada periode 2010-2015 sebagai sampel. Data perusahaan terpilih berjumlah 65, sehingga total pengamatan dalam penelitian ini adalah 365 perusahaan-tahun. Metode pengujian dalam penelitian ini menggunakan analisis regresi berganda dengan data panel. Hasil penelitian ini menunjukkan bahwa manajemen laba riil tidak berpengaruh signifikan terhadap penghindaran pajak. Hasil ini menunjukkan bahwa manajemen laba riil yang dilakukan oleh perusahaan tidak dapat mendeteksi kegiatan penghindaran pajak yang dilakukan oleh perusahaan manufaktur di Bursa Efek Indonesia (BEI). Sementara itu, hubungan politik memiliki dampak positif yang signifikan terhadap penghindaran pajak, yang berarti rata-rata perusahaan menggunakan koneksi politiknya untuk mendapatkan pembayaran pajak yang lebih rendah. Perusahaan cabang atau anak perusahaan dapat digunakan oleh perusahaan untuk lebih menghindari pajak dengan memanfaatkan aktivitas luar negeri yang melekat pada mereka untuk mengurangi pajak melalui skema profit shifting serta profit holding sebagaimana dibuktikan oleh hasil penelitian. Kata Kunci: koneksi politik; aktivitas luar negeri; manajemen laba; penghindaran pajak.Abstract. This research is aimed to provide empirical evidence about relationship between political connection, foreign activity, and real earnings management on tax avoidance. Hanlon Heitzman (2010) defines tax avoidance as a continuum tax planning strategis to reduce the explicit taxes. Using purposive sampling, this research selects manufacturing companies that are listed in Indonesian Stock Exchange (IDX) in the period 2010-2015 as samples. Selected company data amounted to 65, so the total observation in this study are 365 firm-years. The data examination in this study uses multiple regression analysis with dated panel.The results of this study indicate that real earnings management has no significant effect on tax avoidance. These results mean that real earnings management conducted by the company can not detect tax avoidance activities undertaken by manufacturing firms in IDX. Meanwhile, political connections have a significant positive effect on tax avoidance, meaning that the average company uses its political connections to lower tax payments. Furthermore, a branch or subsidiary-like company can be used by companies to avoid more taxes by utilizing foreign activities stick to them to reduce taxes through profit shifting schemes as well as profit holding as evidenced by a significant positive effect. Keywords: earnings management; foreign activity; political connection; tax avoidance. Abstrak. Penelitian ini bertujuan untuk memberikan bukti empiris terkait hubungan antara koneksi politik, aktivitas luar negeri, dan manajemen laba riil terhadap praktik penghindaran pajak. Hanlon Heitzman (2010) mendefinisikan penghindaran pajak sebagai perencanaan pajak yang kontinu untuk mengurangi pajak eksplisit. Dengan menggunakan metode purposive sampling, penelitian ini memilih perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia (BEI) pada periode 2010-2015 sebagai sampel. Data perusahaan terpilih berjumlah 65, sehingga total pengamatan dalam penelitian ini adalah 365 perusahaan-tahun. Metode pengujian dalam penelitian ini menggunakan analisis regresi berganda dengan data panel. Hasil penelitian ini menunjukkan bahwa manajemen laba riil tidak berpengaruh signifikan terhadap penghindaran pajak. Hasil ini menunjukkan bahwa manajemen laba riil yang dilakukan oleh perusahaan tidak dapat mendeteksi kegiatan penghindaran pajak yang dilakukan oleh perusahaan manufaktur di Bursa Efek Indonesia (BEI). Sementara itu, hubungan politik memiliki dampak positif yang signifikan terhadap penghindaran pajak, yang berarti rata-rata perusahaan menggunakan koneksi politiknya untuk mendapatkan pembayaran pajak yang lebih rendah. Perusahaan cabang atau anak perusahaan dapat digunakan oleh perusahaan untuk lebih menghindari pajak dengan memanfaatkan aktivitas luar negeri yang melekat pada mereka untuk mengurangi pajak melalui skema profit shifting serta profit holding sebagaimana dibuktikan oleh hasil penelitian. Kata Kunci: koneksi politik; aktivitas luar negeri; manajemen laba; penghindaran pajak.

The objective of this research is to determine the effect of tax avoidance on firm value, using earnings management as a mediating variable. This research filled an empirical vacuum left by earlier research that used agency theory and signal theory to reexamine the effect of tax avoidance on firm value. This research was carried out to fill up an empirical gap in earlier research that sought to use agency theory and signal theory to reexamine the effect of tax avoidance on firm value. This research is innovative in that it looks at earnings management as a mediator between tax avoidance and firm value. This research makes use of secondary data and a quantitative methodology. Manufacturing enterprises registered on the Indonesia Stock Exchange (BEI) for the 2018–2022 period make up the research population. A total of 185 observations from 37 firm's in this research sample satisfied the criteria. The results of this research show that tax avoidance has an effect on firm value, earnings management has no effect on firm value, and earnings management cannot mediate the effect of tax avoidance on firm value.

The topic related to firm value has persistently become a main issue among stakeholders, as it involves various factors. This study highly contributes in the literature for examining non-ethical factors involved in company, such as tax avoidance and earnings management. Hence, this study aims to analyze the effect of tax avoidance and earnings management on firm value by considering the role of Environmental, Social, and Governance (ESG) ratings as moderating variables. Further, the data was collected from 36 companies in the energy, property & real estate, basic materials, infrastructure, and manufacturing sub-sectors listed on the Indonesia Stock Exchange (IDX) from 2021 to 2023. The moderated regression analysis was utilized to analyze the data. Surprisingly, neither tax avoidance nor earnings management has a significant impact on company value. However, ESG ratings have a significant negative impact on company value. It indicates that the stakeholders might not be considering ESG as a value-adding factor. Furthermore, ESG was unable to moderate the relationship both tax avoidance and earnings management towards company value. These findings suggest that the integration of ESG still requires broader understanding and acceptance in the Indonesian capital market, as well as the need for a strategic approach in ESG implementation to positively impact firm value.

The puspose of this study is to determine the effect of earnings management and tax avoidance on firm value. This type of research is quantitative. The study was conducted on banking companies listed on the Indonesia Stock Exchange in 2014-2018, with a total sample of 135 samples using a purposive sampling method. Data collection methods are documentary studies. The analysis was done by using multiple regression model. Earnings management is measured using discretionary accruals that are calculated using the performance matched model and tax avoidance is measured using an effective tax ratio (ETR). The results of this study indicate that (1) earnings management has a positive but not significant effect on firm value. (2) Tax avoidance has a significant negative effect on firm value. Recommendations for futher research are expected to expand the object of research becouse in this study only examines banking companies. In addition, future research can use other models as a measurement of earnings management and look for other independent variables if you want to do the same research.Keywords: Earnings Management; Tax Avoidance; Firm Value.

The purpose of this study is to analyze tax avoidance, financial leverage, and executive bonus to firm value with earnings quality as a moderating variable. This study uses panel data (pooled data) with the population used including all companies listed on the Indonesia Stock Exchange in the period 2014 to 2017 selected by purposive sampling which is part of the non-probability sampling method. The selected criteria include companies conducting initial public offerings (IPOs) after January 1, 2010, by eliminating the population of companies which are the financial, banking and property sectors, real estate, building construction, aviation, shipping, oil and gas, and mining, companies that have profit before tax (pre-tax income) is negative, and companies that do not have complete data, namely financial statement data and annual reports for the 2014–2017 period. From the results of this study, it was found that Tax avoidance harms firm value, Financial leverage has a positive effect on firm value, Executive bonus has a positive effect on firm value, Earnings quality does not affect firm value, and Earnings quality strengthens the negative effect of tax avoidance on firm value, Earnings quality does not moderate the effect of financial leverage on firm value, earnings quality does not moderate the effect of executive bonus on firm value.

This study aims to examine the relationship of tax avoidance to firm value with earnings quality as an intervening variable in companies engaged in manufacturing in Indonesia. The sample in this study are manufacturing companies listed on the Indonesia Stock Exchange in 2017 - 2022. This type of research is quantitative research. The research sample used as many as 134 manufacturing companies listed on the Indonesia Stock Exchange in 2017 - 2022. The data used are financial reports and annual reports issued by the company each year. The sampling technique uses purposive sampling method. The results of this study indicate that tax avoidance has no effect on earnings quality, earnings quality has a positive effect on firm value and tax avoidance has a negative effect on firm value. In addition, this study also shows that earnings quality cannot be an intervening variable in the relationship of tax avoidance and firm value. KEYWORDS: tax avoidance, firm value, and earnings quality.

Understanding the relationship between tax avoidance and earnings management is crucial to evaluating tax policies and ensuring transparent financial reporting. Prior research has highlighted complexities and inconsistent findings, particularly concerning the impact of tax-related reporting incentives. This study addresses these issues by examining the influence of tax incentive recipient status on tax avoidance and earnings management among firms listed on the Kuala Lumpur Stock Exchange (KLSE). It examines whether firms receiving tax incentives from the Malaysian Investment Development Authority (MIDA) exhibit different earnings management behaviours than non-recipient firms. This study employs the effective tax rate (ETR) as a measure of tax avoidance and discretionary accruals (DEM) for earnings management. The dataset includes manually extracted financial information from firms listed on the KLSE for the financial year 2017 and a listing of tax incentive recipient firms from MIDA. Analytical techniques include ANOVA, independent samples t-test, and multiple regression analysis. The findings of this study suggest that higher tax avoidance relates to higher earnings management. Additionally, firms receiving tax incentives exhibit significantly higher ETRs than non-recipients. They are less likely to engage in earnings management, suggesting that tax incentives may deter aggressive financial reporting practices due to compliance pressures. The additional analysis indicates that tax incentives do not significantly moderate the relationship between tax avoidance and earnings management, implying that other pressures still play a crucial role. This study contributes to existing knowledge by emphasizing the need for robust regulatory frameworks that balance economic growth and financial reporting integrity.

This study analyzes the effects of tax planning, tax avoidance, and leverage on firm value in Consumer Cyclicals and Non-Cyclicals companies listed on the Indonesia Stock Exchange during the period 2020–2022. The research design used in this study is a quantitative method. Data were sourced from financial statements through www.idx.co.id. The techniques of data analysis are descriptive statistics, classical assumption tests, and multiple linear regression using the Random Effect Model (REM). Hypothesis testing was conducted by using a t-test for partial effects and F-tests for simultaneous effects. The results show that, on a partial basis, tax planning and tax avoidance do not have any significant impact on firm value, while on the other hand, leverage has a positive and significant effect on firm value. Aggregately, the three independent variables comprising tax planning, tax avoidance, and leverage substantially affect firm value. The findings of this research suggest that leverage is a critical factor in enhancing a firm's value, while tax strategies, although effective in reducing tax obligations, may not be considered as a key determinant in the valuation of investors. In this regard, the findings suggest that management should exercise caution when engaging in aggressive tax strategies, because most investors are more concerned about long-term stability and good corporate governance. Keywords: Tax Avoidance; Tax Planning; Leverage; Firm Value

This research aims to test and analyze the effect of tax avoidance on company value with earnings management as a moderating variable in consumer goods sector companies listed on the Indonesia Stock Exchange. The object of this research is companies in the food and beverage sub-sector consumption sector during the 2020-2022 period, so there are 19 sample companies. The method used is linear regression with research results (1) Tax avoidance has a significant positive effect on company value (2) Tax avoidance has a significant effect on company value but not through earnings management. The earnings management variable cannot be used as a moderating variable model. (3) Earnings management cannot influence the relationship between tax avoidance and company value. The results of this research can then become a source of literature explaining the influence of tax avoidance on company value with earnings management as a moderating variable.

This study aims to determine the role of audit committee in moderating the impact of profitmanagement and tax avoidance on the value of the business. The population of this study is allmanufacturing companies listed on the Indonesian Stock Exchange, while thee research sample is ofmanufacturing company data, obtains on the Indonesian Stock Exchange in 2015-2019. The sampleselection technique used does not affect, the number of obtains on samples was 28 and the number ofobservations of research data obtain affect. This study used multiple linear regression and moderateregression analysis with a Random Effects Model approach. The findings of this. The study indicatesthat earnings management has a negative effect on firm value, while tax avoidance as proxies studyindicates effective managements no effect on firm value. Then the audit committee does not moderatethe effect of earnings management on firm value, as well as the audit committee does not moderate theeffect of tax avoidance on firm value.

Objective – This research aims to determine and analyze related party transactions to increase firm value through opportunistic behaviour management by conducting earnings management on manufacturing companies listed on the Indonesian Stock Exchange between 2015 and 2018. Methodology/Technique – There are 34 companies that fulfill the requirements to become the sample of this study. The method applied in analyzing the data is verification using path analysis. Findings – The results of the research show that related party transactions do not have any significant effect on firm value however it indicates a positive impact. Moreover, related party transactions do not have any significant impact on earning management yet it gives a negative impact on earning management. Novelty – The influence of earnings management shows a positive impact on firm value while it shows no signs of positive impact on firm value. The analysis shows that the value of the indirect impact of related party transactions through earnings management towards firm value is negative being 0.022 smaller than the direct impact of related party transaction toward firm value which is 0.053. This indicates that related party transactions through earnings management have no significant impact on firm value. Type of Paper: Empirical. Keywords: Related Party Transactions; Earnings Management; Firm Value. Reference to this paper should be made as follows: Suryani, A., Atikah; Putri, H. T. 2019. The Effect of Related Party Transactions through Opportunistic Behaviour Management to Increase Firm Value, J. Fin. Bank. Review 4 (2): 64 – 72 https://doi.org/10.35609/jfbr.2019.4.2(3) JEL Classification: G02, G30, G32, G39.

This puspose of this tudy to determine the effect of earnings management, tax avoidance, and profitability on firm value. This type type of research is quantitative. The study was conducted on banking companies listed index LQ45 on the Indonesia Stock Exchange in 2015-2021, with a total sample of 35 samples using a purposive sampling method. Data collection methods are secondary data. The analysis was done by using panel data method. Earnings management is measured using price to book value (PBV), tax avoidance is measured using an effective tax ratio (ETR), and profitability is measured using an return on asset (ROA). The results of this study indicate that (1) earnings management has a positive on firm value. (2) tax avoidance has a positive on firm value. (3) profitability has a positive on firm value.

This study aims to analyze and provide empirical evidence on the influence of profitability on tax avoidance; the influence of leverage on tax avoidance; the influence of audit quality and earnings management on tax avoidance; the moderation effect of capital intensity on the relationship between profitability and tax avoidance; the moderation effect of capital intensity on the relationship between leverage and tax avoidance; and the moderation effect of capital intensity on the relationship between audit quality and earnings management with tax avoidance. The research methodology employed is quantitative. Secondary data sources consist of financial reports from companies in the infrastructure sector listed on the Indonesia Stock Exchange during the period 2020-2022. The population comprises companies in the infrastructure sector, with a sample size of 111 selected using purposive sampling based on specified criteria. The research employs panel data regression analysis, with data processed using Eviews version 12. Partially, the study finds that ROA, leverage, and audit quality significantly influence tax avoidance, while earnings management does not significantly affect tax avoidance. Capital intensity strengthens the influence of ROA and earnings management on tax avoidance, while weakening the influence of leverage and audit quality on tax avoidance.

Purpose: This study aims to empirically prove the influence of the company’s life cycle on tax avoidance with earnings management as an intervening variable. Research methodology: Tax avoidance used ETR proxies and firm life cycle was proxied using an average sales growth of 5 years. The firm life cycle used the Dummy variable, valued at 1 classified growth stage and valued at 0 mature stages. Study sample of non-financial companies listed on the Indonesia Stock Exchange in 2010-2018. The sample selection method is Purposive Sampling method with 668 observations. Data analysis method with multiple regression analysis. Results: The firm life cycle has an influence on tax avoidance, indicating companies that are in a mature life cycle will avoid lower taxes than companies that are in the growth stage. Regression results indicate that earnings management variable is a partial intervening/mediation variable (Partial Mediation), which indicates that the firm life cycle influences tax avoidance through earnings management. Limitations: The limitation of this study is that the firm life cycle variables studied were only two cycles. In addition, the limitation of this study is that it only uses proxies for average sales growth to classify the life cycles of sample companies. Contribution: To add references related to tax avoidance, firm’s life cycle and earnings management. Suggestions for further research are adding other cycles so that they can more broadly see the effect of the firm’s life cycle on tax avoidance. And use other proxies that are more representative in classifying the firm’s life cycle, such as using based on cash flow patterns. Keywords: Tax avoidance, Firm life cycle, Earnings management