THE RELATIONSHIP BETWEEN TAX AVOIDANCE AND FIRM VALUE, MODERATED BY EXECUTIVE COMPENSATION
Keywords:
tax avoidance, firm value, executive compensation
Abstract
This research attempts to find out the significant relationship between tax avoidance and firm value and moderate by executive compensation. The theories that are related to this study are agency theory and bonus plan hypothesis. This study is a quantitative research that used secondary data of manufacturing companies listed on the Indonesia Stock Exchange from the period 2016 - 2019. The sampling technique is done by purposive sampling which results 58 companies with 232 data observations. The statistical analysis tool of this study is Smart-PLS version 3.3.2 to test the hypothesis. The results showed that tax avoidance has a negative significant influence on firm value, executive compensation has positive significant influence on firm value, and executive compensation moderate the relationship between tax avoidance and firm value.
References
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[30] Kontesa, M. 2015. Capital Structure, Profitability, And Firm Value. What's New? Research Journal of Finance and Accounting, Vol. 6, No. 20, pp. 185 - 192.
[31] Sandhika, U. 2013. Effect of Corporate Social Responsibility Information Disclosure on Financial Performance and Firm Value in Banking Industry Listed at Indonesia Stock Exchange. European Journal of Business and Management, pp. 2222-2839.
[32] Julia, F., Mukhtaruddin, Yuniarti, E., & Saputra. 2014. Good Corporate Governance, Company’s Characteristics and Firm’s Value: Empirical Study of Listed Banking on Indonesian Stock Exchange. GSTF Journal on Business Review , Vol. 3, No. 4, pp. 81 - 88.
[33] Fich, E. 2015. Motivated Monitors: The Importance of Institutional Investors' Portfolio Weights. Journal of Financial Economics, Vol. 118, No. 1, pp. 21-48.
[2]Subramanyam., K. R. 2011. Analisis Laporan Keuangan. Jakarta: Salemba Empat.
[3] Agustia, D. 2012. Pengaruh Profitabilitas dan Likuiditas terhadap Nilai Perusahaan dengan Struktur Modal sebagai Variabel Intervening. Jurnal Akuntansi KePerilakuan Indonesia, Vol. 2, No. 1.
[4] Pratama, Arie. 2018. Do Related Party Transactions and Tax Avoidance Affect Firm Value? Review of Integrative Business and Economics Research, Vol.7, No. 1, pp. 106-116.
[5] Austin, C. R., & Wilson, R. J. 2017. An Examination of Reputational Costs and Tax Avoidance: Evidence from Firms with Valuable Consumer Brands. The Journal of the American Taxation Association. Vol. 39, No. 1, pp. 67-93.
[6] Armstrong, C. S., Blouin., & Jagolinzer. 2015. Corporate Governance, Incentives, and Tax Avoidance. Journal of Accounting and Economics, Vol. 60, No. 1, pp. 30-42.
[7] Chen, X., Wang., & Tang. 2014. Tax Avoidance and Firm Performance: Evidence from China. Nankai Business Review International, Vol. 5, No. 1, pp. 25–42.
[8] Khuong, N., Vin Liem, N., & Thu, P. A. 2020. Does corporate tax avoidance explain firm performance? Evidence from an emerging economy. Cogent Business & Management, Vol. 7, No. 1, pp. 1-17.
[9] Zhang, C., Cheong, K. C., & Rasiah, R. 2017. Corporate Tax Avoidance and Performance: Evidence from China’s Listed Companies. Institutions and Economies, Vol. 8, No. 3, pp. 61–83.
[10] Kim, J. B., & Zhang, L. 2011. Corporate Tax Avoidance and Stock Price Crash Risk: Firm-level Analysis. Journal of Financial Economics, Vol. 100, No. 3, pp. 639–662.
[11] Jensen, M. C., & Meckling. 1976. Theory of The Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, Vol. 3, pp. 305-360.
[12] Dewi, G. A., & Sari, M. 2015. Pengaruh Insentif Eksekutif, Corporate Risk dan Corporate Governance Pada Tax Avoidance. E-Jurnal Akuntansi, Vol. 13, No. 1, pp. 50-67.
[13] Bebchuk, L., & Fried, J. 2003. Executive Compensation as an Agency Problem. Journal of Economic Perspective, Vol. 17, No. 3, pp. 71-92.
[14] Watts, R. L & Zimmerman. 1986. Positive Accounting Theory. Englewood Cliffs, N.J. Prentice-Hall.
[15] Elsayed, N., & Elbardan, H. 2018. Investigating The Associations between Executive Compensation and Firm Performance: Agency Theory or Tournament Theory. Journal of Applied Accounting Research, Vol. 19, No. 2, pp. 245-270.
[16] Jensen, M., & Murphy, K. J. 1990. Performance Pay and Top-Management Incentives. Journal of Political Economy, Vol. 98, No. 2, pp. 225-264.
[17] Harakeh, M., El-Gammal, W., & Matar, G. 2019. Female Directors, Earnings Management, and CEO Incentive. Research in International Business and Finance, Vol. 50, No. 1, pp. 153-170.
[18] Brigham, E. F. 2010. Intermediate Finnancial Management (Ed. 10) South Western: Cengage Learning.
[19] Herdiyanto, D. G. 2015. Pengaruh Tax Avoidance terhadap Nilai Perusahaan. Diponegoro Journal Of Accounting , Vol. 4, No. 3, pp. 1–10.
[20] Zahroh, D. P., & Azizah, D. 2013. Pengaruh Keputusan Investasi dan Keputusan Pendanaan Terhadap Nilai Perusahaan. Jurnal Administrasi Bisnis Universitas Brawijaya, Vol. 5, No. 1.
[21] Jones, S. Principles of Taxation for Business and Investment Planning (ed. 14). New York. McGraw Hill.
[22] Huseynov, F., & Klamm, B. 2012. Tax Avoidance, Tax Management, and Corporate Social Responsibility . Journal of Corporate Finance, Vol. 18, Vol. 4, pp. 804-827.
[23] Kim, J. B., & Zhang, L. 2011. Corporate Tax Avoidance and Stock Price Crash Risk: Firm-level Analysis. Journal of Financial Economics, Vol. 100, No. 3, pp. 639–662.
[24] Buachoom, W. 2017. Simultaneous Relationship Between Peformance and Executive Compensation of Thai Non Financial Firms. Asian Review of Accounting, Vol. 25, No. 3, pp. 404-423.
[25] Kartadjumena, E., & Rodgers, W. 2019. Executive Compensation, Sustainability, Climate,Environmental Concerns, and Company Financial Performance: Evidence from Indonesian Commercial Banks. Sustainability, Vol. 11, No. 6, pp. 1673.
[26] Huang., Ying., & Shen. 2018. Executive Cash Compensation and Tax Aggressiveness of Chinese Firms. Review of Quantitative Finance and Accounting, Vol. 51, pp. 1151–1180.
[27] Dyreng., Hanlon., & Maydew. 2008. Long-run Corporate Tax Avoidance. The Accounting Review, Vol. 83, pp. 61–82.
[28] Ghozali, I., & Latan. 2015. Partial Least Square: Konsep, Teknik dan Apikasi Menggunakan Program Smart PLS 3.0 (ed. 2). Semarang. Universitas Diponegoro.
[29] Abdallah, S, A., & Matar, G. 2012. CEO Compensation and Firm Value. Journal of Business & Economics Research, Vol. 10, No. 12, pp. 689 - 694.
[30] Kontesa, M. 2015. Capital Structure, Profitability, And Firm Value. What's New? Research Journal of Finance and Accounting, Vol. 6, No. 20, pp. 185 - 192.
[31] Sandhika, U. 2013. Effect of Corporate Social Responsibility Information Disclosure on Financial Performance and Firm Value in Banking Industry Listed at Indonesia Stock Exchange. European Journal of Business and Management, pp. 2222-2839.
[32] Julia, F., Mukhtaruddin, Yuniarti, E., & Saputra. 2014. Good Corporate Governance, Company’s Characteristics and Firm’s Value: Empirical Study of Listed Banking on Indonesian Stock Exchange. GSTF Journal on Business Review , Vol. 3, No. 4, pp. 81 - 88.
[33] Fich, E. 2015. Motivated Monitors: The Importance of Institutional Investors' Portfolio Weights. Journal of Financial Economics, Vol. 118, No. 1, pp. 21-48.
Published
2021-12-01
How to Cite
Safiq, M., Phan, S., & Kusumastati, W. (2021). THE RELATIONSHIP BETWEEN TAX AVOIDANCE AND FIRM VALUE, MODERATED BY EXECUTIVE COMPENSATION. Jurnal Inovasi Penelitian, 2(7), 2193-2202. https://doi.org/10.47492/jip.v2i7.1062
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Articles
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