Abstract
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
Highlights
The establishment of a company has a goal to maximize profits so that it can prosper shareholders
It is known that the number of samples (N) is 225 data of manufacturing companies, the variables studied are the ratio of profitability, tax avoidance, firm value (Tobin’s Q) and earnings management
Effect of profitability on company value Based on the results of research Return on Assets (ROA) has a significant positive effect on firm value
Summary
The establishment of a company has a goal to maximize profits so that it can prosper shareholders. Maximizing profits can increase the value of the company. Shareholders will give assignments to financial management to maximize company value. The management as the manager in the company has more information about the company and is ahead of the shareholders. The problem between managers and shareholders is called agency problem. The existence of agency problems will lead to not achieving the company's financial goals, namely increasing the value of the company by maximizing shareholder wealth (Verawaty et al 2017). The following is a sample of share price data from 5 (five) companies listed on the Indonesia Stock Exchange in 2013 - 2017:
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