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VOL. 10, ISSUE 4 (2025)
The impact of corporate governance, financial performance, and managerial ownership on tax avoidance
Authors
Nadya Sinthya Bella, Aditya Septiani, Etna Nur Afri Yuyetta
Abstract
This study is motivated by the growing public
concern over tax avoidance practices in Indonesia, particularly in the
pharmaceutical sector, which operates under strict regulations, faces profit
margin pressures, and has received various fiscal incentives, especially during
and after the COVID-19 pandemic. The purpose of this research is to analyze the
effect of corporate governance, financial performance, and managerial ownership
on tax avoidance, while considering firm size, leverage, and capital intensity
as control variables. This research employs a quantitative approach with a
causal-comparative design. Secondary data were obtained from annual reports of
pharmaceutical companies listed on the Indonesia Stock Exchange for the 2020-2023
period, using purposive sampling with a total of 44 observations. Data analysis
was conducted using multiple linear regression, with the Effective Tax Rate
(ETR) and Book-Tax Difference (BTD) as proxies for tax avoidance. The results
indicate that financial performance has a significant negative effect on tax
avoidance when measured using ETR, whereas corporate governance and managerial
ownership show no significant effect. Among the control variables, leverage has
a significant effect on both tax avoidance proxies, while firm size and capital
intensity are not significant. These findings reinforce agency theory,
suggesting that financial factors and capital structure play a crucial role in
corporate tax strategies. This research provides implications for regulators
and corporate management to consider financial and governance factors as part
of tax control policies and recommends further studies with a broader time
frame and sectoral scope.
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Pages:6-10
How to cite this article:
Nadya Sinthya Bella, Aditya Septiani, Etna Nur Afri Yuyetta "The impact of corporate governance, financial performance, and managerial ownership on tax avoidance". International Journal of Advanced Scientific Research, Vol 10, Issue 4, 2025, Pages 6-10
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