Effect of Tax Avoidance and Company Complexity on Firm Value: The Role of Transparency as a Moderating Variable

Thalia Millene Suryani,Noegrahini Lastiningsih,Ekawati Jati Wibawaningsih

doi:10.22610/jebs.v13i2(j).3155

Thalia Millene Suryani, Noegrahini Lastiningsih + Show 1 more

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https://doi.org/10.22610/jebs.v13i2(j).3155

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Abstract

This study aims to analyze the effect of tax avoidance and company complexity on firm value with information transparency as a moderating variable so that internal and external parties can evaluate management performance to increase firm value positively. In this study, panel data regression and Moderated Regression Analyst (MRA) were carried out on 78 public manufacturing companies on the IDX during the 2017-2019 period. Tax avoidance is measured by the BTD proxy, the level of complexity is measured by the number of business segments, firm value is measured by Tobin's q proxy, and information transparency is measured by the transparency index released by BAPEPAM. The results show that tax avoidance has a significant negative effect on firm value and firm complexity does not have a significant effect on firm value, while information transparency moderates the relationship between tax avoidance and firm value but is unable to moderate the effect of firm complexity on firm value.

Highlights

Before the 1980s, oil and natural gas played an important role in state financial revenues, the times and the rate of world inflation which inevitably resulted in the sluggish price of oil and natural gas, led to a decline in state financial revenues
Descriptive Statistics: Table 3 shows that the number of samples (N) used in this study was 234 samples, the smallest firm value was 0.329 the largest was 23.28 with an average of 2.08 and a standard deviation of 2.76
Based on the objectives of this study, it can be concluded that tax avoidance has a significant effect on firm value but in a negative direction

Summary

Introduction

Before the 1980s, oil and natural gas played an important role in state financial revenues, the times and the rate of world inflation which inevitably resulted in the sluggish price of oil and natural gas, led to a decline in state financial revenues. Reporting from the State Revenue and Expenditure Budget report for the 2019 budget issued, by the Ministry of Finance, tax revenue is IDR 2,164.7 B or contributes more than 80% of state revenue and this figure continues to increase every year, especially with the increase in population. This tax revenue is used to finance national development and to make the community prosperous. This fact shows that there is a research gap, that is, an increasing tax ratio does not reflect an increase in economic growth This phenomenon shows the high tax avoidance in Indonesia

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