Abstract
<p>This research provided two analyses: (1) whether the firm characteristics and earnings management practices might influence the amount of tax amnesty's assets presented in the financial statement; and (2) whether the amount of tax amnesty's assets influenced the firm value. There are 86 observations obtained from Indonesian public listed companies that participate in the tax amnesty program during 2016 – 2017. This research used multiple regression to conduct each analysis. The results showed that a company with a high level of earnings management discloses more tax amnesty's assets. The result also showed that the higher the tax amnesty's assets, the lower the firm value would be. These results showed that a company that conducting earnings management utilise tax amnesty as a haven for avoiding political costs, but on the other side, the tax amnesty disclosure regarded by an investor as an act of confessions of past tax sins. Moreover, these results might contribute to the new insight into tax practices in global business.</p>
Highlights
The information appears in the financial statements, investors still made decisions on various traditional financial ratios and performance (Bowe and Domuta, 2004; Wibowo, 2010)
The population is the company listed in the Indonesian Stock Exchange that participated in tax amnesty during 2016 – 2017
It is not possible to obtain the actual data of tax amnesty participants, due to the secrecy maintained by the Directorate General of Tax, so the participation is indicated by the information of the adoption of SFAS 70 in the company's financial statement
Summary
The information appears in the financial statements, investors still made decisions on various traditional financial ratios and performance (Bowe and Domuta, 2004; Wibowo, 2010). The financial statement might present the information whether the company has been successful in legally reducing the income tax payable (Hanlon, 2003; Nor, et al, 2010; Seetharaman, 2011; Barrios, et al, 2019). In the year 2016, the Indonesian government launched tax amnesty program, in which provide forgiveness for noncomplying taxpayers by requiring them to disclose their past unreported income in the form of tax amnesty's assets and liabilities, and paid the redemption fee to the tax authority (Pratama, 2018; Pratama, 2019) This requirement to disclose and paid redemption fees was to have an impact on the financial statements. By providing cause-and-effect analysis this research could explain the comprehensive story about how the tax items in financial statements interact with the firms and investors. The rest of the paper would be divided as follows: Section 2 would explain about literature review and hypothesis development, Section 3 would explain the research method, Section 4 would explain about the result and discussions, and Section 5 would conclude the article
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