Abstract
This study aims to analyse the effect of management compensation, gender diversification, and executive preferences on tax avoidance practices in Indonesia Stock Exchange (IDX). Conceptually, this study uses mediating variables of executive gender diversification and executive preferences in the relationship between management compensation and tax avoidance. This study uses balanced panel data with a total of 404 observations from manufacturing companies listed on the Indonesia Stock Exchange in the 2015-2018 period. The results showed a negative assessment of management compensation on tax avoidance. However, further examination revealed that management compensation will positively influence tax avoidance if compensation is given to the board of directors who have gender diversification characteristics in the composition of their members indicated by at least one female director on the board of directors. Lastly, the greater the management compensation given to executives who have risk taker characteristics will also make directors to do greater tax avoidance.
Highlights
Indonesia is one of the countries that still rely on income from the tax sector as the largest source of state revenue
This study does not include companies engaged in the financial industry, the construction industry, property and the mining industry because the industry is subject to final tax on the amount of its income
This shows that companies in Indonesia are taking tax avoidance steps in various ways either through increasing revenue or decreasing revenue
Summary
Indonesia is one of the countries that still rely on income from the tax sector as the largest source of state revenue. Experts and academics still differ in using this term, in general, the idea of tax avoidance can be determined as any attempt by companies to minimize the amount of tax that must be paid to the state (Abdullah et al, 2019). It can pose great risks in the future for the company, it does not prevent the company from continuing to avoid taxes (Zulma, 2015). Tax avoidance does provide big benefits, especially in the company's cash flow
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
