Incentives, Institutional Ownership, and Profitability on Tax Avoidance, Moderated by Audit Quality

Authors

  • Fahreza Utama Universitas Mercu Buana Jakarta
  • Lin Oktris Universitas Mercu Buana Jakarta

DOI:

https://doi.org/10.58344/locus.v4i7.4138

Keywords:

Tax Avoidance, Management Incentives, Institutional Ownership, Profitability, Audit Quality

Abstract

The purpose of this study was to examine the effect of management incentives (executive compensation), institutional ownership, and profitability on tax avoidance moderated by audit quality. Tax avoidance in this study is measured by the Effective Tax Rate (ETR) proxy. This research is quantitative type research that uses secondary data sources derived from the financial statements of manufacturing companies listed on the Indonesia Stock Exchange (IDX) in 2020-2022. The number of samples obtained was 213 data using purposive sampling method. The data in this study is panel data so that panel data regression analysis is carried out which is assisted by the EVIEWS (Econometric Views) version 10 data processing program. The results of this study indicate that management incentives and institutional ownership have no significant effect, but profitability has a significant positive effect. Furthermore, audit quality cannot moderate the effect of management incentives on tax avoidance, but audit quality can moderate the effect of institutional ownership and profitability on tax avoidance

References

Akbar, L. R., & Gunadi, G. (2021). Implementasi Kebijakan Keterbukaan Akses Data Perbankan Dalam Meningkatkan Tax Compliance Di Indonesia. Jurnal Akuntansi Dan Governance, 1(2), 89. https://doi.org/10.24853/jago.1.2.89-103

Anasta, L., Tarmidi, D., Harnovinsah, Temalagi, S., Oktris, L., & Dwianika, A. (2023). Manajemen Pajak: Teori, Strategi, dan Implementasi (B. Hernalyk, Ed.). Salemba Empat.

Anggara, I. N. A. W., Verawati, Y., & Bhegawati, D. A. S. (2023). Pengaruh Profitabilitas, Likuiditas, Kualitas Audit, Corporate Governance dan Ukuran Perusahaan terhadap Penghindaran Pajak. Jurnal Inovasi Akuntansi (JIA), 1(1), 88–101. https://doi.org/10.36733/jia.v1i1.6892

Ardillah, K., & Prasetyo C, A. (2021). Executive Compensation, Executive Character, Audit Committee, and Audit Quality on Tax Avoidance. Akuntabilitas, 14(2), 169–186. https://doi.org/10.15408/akt.v14i2.22114

Asih, K. L., & Darmawati, D. (2022). The Role of Independend Commisioners in Moderating the Effect of Profitability, Company Size and Company Risk on Tax Avoidance. Asia Pacific Fraud Journal, 6(2), 235–248. https://doi.org/10.21532/apfjournal.v6i2.222

Brown, M., Monsour, M. B., Cobham, A., Soll, D. C., Danzi, E., Etter-Phoya, R., Figueroa, D., Garcia-Bernardo, J., Fowler, N., Harari, M., Hofman, L., Holland, L., Jones, S., Killoch, L., Kope?ek, M., Knobel, A., Lorenzo, F., Linge, I., Meinzer, M., … Shaxson, N. (2021). The state of tax justice 2021. Tax Justice Network, November.

Chee, S., Choi, W., & Shin, J. E. (2017). The non-linear relationship between CEO compensation incentives and corporate tax avoidance. Journal of Applied Business Research, 33(3), 439–450. https://doi.org/10.19030/jabr.v33i3.9935

Dabari, I. J., & Liuraman, Z. (2022). Moderating Effect of Audit Quality on the Relationship Between Ownership Structure and Tax Aggressiveness of Listed Consumer Goods Companies in Nigeria. NDA Journal of Management Sciences Research, 2(1), 44–53.

Dakhli, A. (2022). The impact of ownership structure on corporate tax avoidance with corporate social responsibility as mediating variable. Journal of Financial Crime, 29(3), 836–852. https://doi.org/10.1108/JFC-07-2021-0152

Darsani & Sukartha. (2021). The Effect of Institutional Ownership, Profitability, Leverage and Capital Intensity Ratio on Tax Avoidance. American Journal of Humanities and Social Sciences Research (AJHSSR), 5(1), 13–22.

Ernawati, S., Chandrarin, G., Respati, H., & Asyikin, J. (2021). The Effect of Profitability, Leverage and Company Size on Tax Avoidance through Earnings Management Practices in Go Public Manufacturing Companies in Indonesia. East African Scholars Journal of Economics, Business and Management, 4(7), 162–176.

Fitrifiani, F., & Oktris, L. (2023). The Effect of Profitability, Public Ownership and Fiscal Loss Compensation on Tax Avoidance Moderated by Audit Quality. International Journal For Multidisciplinary Research, 5(1), 1–16. https://doi.org/10.36948/ijfmr.2023.v05i01.1647

Huang, W., Ying, T., & Shen, Y. (2018). Executive cash compensation and tax aggressiveness of Chinese firms. Review of Quantitative Finance and Accounting, 51(4), 1151–1180. https://doi.org/10.1007/s11156-018-0700-2

Jbir, S., Neifar, S., & Makni Fourati, Y. (2021). CEO compensation, CEO attributes and tax aggressiveness: evidence from French firms listed on the CAC 40. Journal of Financial Crime, 28(4), 1141–1160. https://doi.org/10.1108/JFC-10-2020-0202

Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3 (4), 305–360. https://doi.org/10.1017/CBO9780511817410.023

Jihene, F., & Moez, D. (2019). The Moderating Effect of Audit Quality on CEO Compensation and Tax Avoidance: Evidence from Tunisian Context International Journal of Economics and Financial Issues The Moderating Effect of Audit Quality on CEO Compensation and Tax Avoidance: Evidence fro. International Journal of Economics and Financial Issues, 9(1), 131–139. https://doi.org/10.32479/ijefi.7355

Khan, M., Srinivasan, S., & Tan, L. (2017). Institutional ownership and corporate tax avoidance: New evidence. Accounting Review, 92(2), 101–122. https://doi.org/10.2308/accr-51529

Manullang, Y. (2024). The Influence Of Financial Performance , Audit Quality , Earnings Management On Tax Avoidance With Capital Intensity As A Moderating Variable. Ekombis Review - Jurnal Ilmiah Ekonomi Dan Bisnis, 12(28), 3835–3850. https://doi.org/10.37676/ekombis.v12i4.6470

Marsahala, Y. T., Arieftiara, D., & Lastiningsih, N. (2020). Profitability, capital intensity and tax avoidance in Indonesia: The effect board of commissioners’ competencies. Journal of Contemporary Accounting, 2(3), 129–140. https://doi.org/10.20885/jca.vol2.iss3.art2

Nanda Mufarikha, E., Rosidi, R., & Andayani, W. (2023). The Effect of Board of Gender Diversity and Institutional Ownership on Tax Aggressivity with Audit Quality as A Moderation Variable. Journal of Applied Business, Taxation and Economics Research, 3(1), 41–53. https://doi.org/10.54408/jabter.v3i1.225

OECD. (2023). Tax-to-GDP ratio Revenue Statistics in Asia and the Pacific 2023 ? Indonesia Range Asia and Pacific Indonesia. 29, 1–2.

Palulu, A. I. A. N., Mus, A. R., & Lannai, D. (2018). Pengaruh Kualitas Auditor, Sistem Pengendalian Internal Dan Komite Audit Terhadap Audit Delay Pada Kantor Akuntan Publik Se Kota Makassar. Ajar, 1(01), 96–112. https://doi.org/10.35129/ajar.v1i01.51

Pitaloka, S., & Aryani Merkusiawati, N. K. L. (2019). Pengaruh Profitabilitas, Leverage, Komite Audit, dan Karakter Eksekutif Terhadap Tax Avoidance. E-Jurnal Akuntansi, 27, 1202–1230. https://doi.org/10.24843/EJA.2019.v27.i02.p14

Qawqzeh, H. K. (2023). The effect of ownership structure on tax avoidance with audit quality as a moderating variable: evidence from the ailing economics. Journal of Financial Reporting and Accounting. https://doi.org/10.1108/JFRA-03-2023-0122

Sarpingah, S. (2020). the Effect of Company Size and Profitability on Tax Avoidance With Leverage As Intervening Variables. EPRA International Journal of Research & Development (IJRD), October, 81–93. https://doi.org/10.36713/epra4552

Sekaran, U., & Bougie, R. (2016). Research Methods for Business: A Skill-Building Approach (Seventh Ed). John Willey & Sons Ltd.

Sihono, A., & Munandar, A. (2023). Moderating effect of audit quality: the case of political connection, executive compensation and tax aggressiveness. Jurnal Ekonomi Modernisasi, 19(1), 15–30. https://doi.org/10.21067/jem.v19i1.7762

Undang-Undang Republik Indonesia Nomor 28 Tahun 2007 Tentang Perubahan Ketiga Atas Undang-Undang Nomor 6 Tahun 1983 Tentang Ketentuan Umum Dan Tata Cara Perpajakan, Pub. L. No. 28, 60 (2007).

Wang, F., Xu, S., Sun, J., & Cullinan, C. P. (2019). Corporate Tax Avoidance: a Literature Review and Research Agenda. Journal of Economic Surveys, 0, 1–19. https://doi.org/10.1111/joes.12347

Downloads

Published

2025-07-01

Issue

Vol. 4 No. 7 (2025): JURNAL LOCUS: Penelitian dan Pengabdian

Section

Articles

License

Copyright (c) 2025 Fahreza Utama, Lin Oktris

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish with this journal agree to the following terms:

  • Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International (CC-BY-SA). that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
  • Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.

Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.