Corporate Governance, Political Connection, Family Ownership and Tax Aggressiveness in Indonesia
Abstract
Tax aggressiveness is a strategy of companies to present lower taxable earnings through tax planning without being accused of committing tax fraud, hence considered as one of the weaknesses of the self-assessment system. The purpose of this study was to examine and analyze the effect of corporate governance and political connection on tax aggressiveness with family ownership as the moderator. This research was conducted on manufacturing companies listed on the Indonesia Stock Exchange from 2016 to 2020. Using purposive sampling method, 49 companies were selected as the sample, resulting in 245 observations. The data were analyzed using multiple regression analysis and moderated regression analysis. This study found that corporate governance does not influence tax aggressiveness, that political connection has a negative effect on tax aggressiveness, and that family ownership does not moderate the influence of corporate governance and political connection on tax aggressiveness.
Keywords: tax aggressiveness, corporate governance, political connection, family ownership
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References
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Chaney, P. K., Faccio, M., & Parsley, D. (2011). The Quality of Accounting Information in Politically Connected Firms. Journal of Accounting and Economics, 51, 58–76. https://doi.org/10.1016/j.jacceco.2010.07.003
Chen, S., Chen, X., Cheng, Q., & Shevlin, T. (2010). Are Family Firms More Tax Aggressive than Non-Family Firms? Journal of Financial Economics, 95(1), 41–61. https://doi.org/10.1016/j.jfineco.2009.02.003
Claessens, S., Djankov, S., Fan, J. P. H., & Lang, L. H. P. (2002). Disentangling the Incentive and Entrenchment Effects of Large Shareholdings. Journal of Finance, 57(6), 2741–2771. https://doi.org/10.1111/1540-6261.00511
Claessens, S., Djankov, S., & Lang, L. H. P. (1999). Who Controls East Asian Corporations- and the Implications for Legal Reform. Retrieved from www.worldbank. org/html/fpd/notes/
Faccio, M. (2006). Politically Connected Firms. American Economic Review, 96(1), 369–386. https://doi.org/10.1257/000282806776157704
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Hanna, & Haryanto, M. (2017). Agresivitas Pelaporan Keuangan, Agresivitas Pajak, Tata Kelola Perusahaan dan Kepemilikan Keluarga. Jurnal Akuntansi, 20(3), 407–419. https://doi.org/10.24912/ja.v20i3.6
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Hijriani, A. N., Latifah, S. W., & Setyawan, S. (2014). Pengaruh Koneksi Politik, Dewan Komisaris dan Karakteristik Perusahaan terhadap Penghindaran Pajak (Perusahaan BUMN yang Terdaftar di Bursa Efek Indonesia). Jurnal Reviu Akuntansi Dan Keuangan, 4(1), 525–534. https://doi.org/10.22219/jrak.v4i1.4924
Hillman, A. J., Withers, M. C., & Collins, B. J. (2009). Resource Dependence Theory: A Review. Journal of Management, 35(6), 1404–1427. https://doi.org/10.1177/0149206309343469
Himawan, A. (2017). Fitra: Setiap Tahun, Penghindaran Pajak Capai Rp110 Triliun. Retrieved from https://www.suara.com/bisnis/2017/11/30/190456/fitra-setiap-tahun-penghindaran-pajak-capai-rp110-triliun
Integrity, G. F. (2019). Indonesia: Potential Revenue Losses Associated with Trade Misinvoicing. Retrieved from https://gfintegrity.org/report/indonesia-potential-revenue-losses-associated-with-trade-misinvoicing/
Jensen, M. C., & Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Agency Cost and Ownership Structure. Journal of Financial Economics, 3(4), 305–360.
Jian, M., Li, W., & Zhang, H. (2012). How Does State Ownership Affect Tax Avoidance? Evidence from China. In School of Accountancy. Retrieved from https://pdfs.semanticscholar.org/8670/e333e536f4717b8574721f75ddf96a08b06b.pdf
Kim, C., & Zhang, L. (2016). Corporate Political Connections and Tax Aggressiveness. Contemporary Accounting Research, 33(1), 78–114. https://doi.org/10.1111/1911-3846.12150
Kim, I. J., Eppler-Kim, J., Kim, W. S., & Byun, S. J. (2010). Foreign Investors and Corporate Governance in Korea. Pacific Basin Finance Journal, 18(4), 390–402. https://doi.org/10.1016/j.pacfin.2010.04.002
Kusbandiyah, A., & Norwani, N. M. (2018). The Influence of Size Firm and Ownership Structure Toward Aggressive Tax Avoidance of Manufacture Companies Listed in Indonesia Stock Exchange. Advances in Social Science, Education and Humanities Research, 231, 132–135. https://doi.org/10.2991/amca-18.2018.37
Landry, S., Deslandes, M., & Fortin, A. (2013). Tax Aggressiveness, Corporate Social Responsibility and Ownership Structure. Journal of Accounting, Ethics and Public Policy, 14(3), 611–645. https://doi.org/10.2139/ssrn.2304653
Lestari, G. A. W., & Putri, I. G. A. M. A. D. (2017). Pengaruh Corporate Governance, Koneksi Politik dan Leverage terhadap Penghindaran Pajak. E-Jurnal Akuntansi Universitas Udayana, 18(3), 2028–2054.
Lestari, P. A. S., Pratomo, D., & Asalam, A. G. (2019). Pengaruh Koneksi Politik dan Capital Intensity terhadap Agresivitas Pajak. Jurnal ASET (Akuntansi Riset), 11(1), 41–54. https://doi.org/10.17509/jaset.v11i1.15772
Lietz, G. (2013). Tax Avoidance vs Tax Aggressiveness. In Working Paper.
Lisowsky, P. (2010). Seeking Shelter: Empirically Modeling Tax Shelters Using Financial Statement Information. Accounting Review, 85(5), 1693–1720. https://doi.org/10.2308/accr.2010.85.5.1693
Mafrolla, E., & D’Amico, E. (2016). Tax Aggressiveness in Family Firms and the Non-Linear Entrenchment Effect. Journal of Family Business Strategy, 7(3), 178–184. https://doi.org/10.1016/j.jfbs.2016.08.003
Mahenthrian, S., & Kasipillai, J. (2012). Influence of Ownership Structure and Corporate Governance on Effective Tax Rates and Tax Planning: Malaysian Evidence. SSRN Electronic Journal, 0–26. https://doi.org/10.2139/ssrn.2384718
OECD. (2015). Glosarry of Statistical Terms: Corporate Governance. Retrieved January 21, 2020, from https://stats.oecd.org/glossary/detail.asp?ID=6778
Pratiwi, N. P. S. D. R., Subekti, I., & Rahman, A. F. (2019). The Effect of Corporate Governance and Audit Quality on Tax Aggressiveness withFamily Ownership as TThe Moderating Variable. International Journal of Business, Economics and Law, 19(5), 31–42. https://doi.org/10.31014/aior.1992.02.01.76
Sari, D. K., & Martani, D. (2010). Ownership Characteistics, Corporate Governance and Tax Aggressiveness. The 3rd Accounting & The 2nd Doctoral Colloquium, 27–28.
Sunaryo, S. (2016). Effect of Family Ownership towards Tax Aggressiveness on Food and Beverages Industrial Company Listed in Indonesia Stock Exchange. Binus Business Review, 7(1), 53. https://doi.org/10.21512/bbr.v7i1.1450
Supatmi, Sutrisno, T., Saraswati, E., & Purnomosidhi, B. (2019). The Effect of Related Party Transactions on Firm Performance: The Moderating Role of Political Connection in Indonesian Banking. Business: Theory and Practice, 20, 81–92.
Taylor, G., & Richardson, G. (2013). The Determinants of Thinly Capitalized Tax Avoidance Structures: Evidence from Australian Firms. Journal of International Accounting, Auditing and Taxation, 22(1), 12–25. https://doi.org/10.1016/j.intaccaudtax.2013.02.005
Ulupui, I. G., Utama, S., & Karnen, K. A. (2015). Pengaruh kepemilikan keluarga, kedekatan direksi dan komisaris dengan pemilik pengendali terhadap kompensasi direksi dan komisaris perusahaan di pasar modal indonesia. Jurnal Organisasi Dan Manajemen, 11(1), 62–74. https://doi.org/10.1016/j.fsigen.2013.08.015
Utami, W. T., & Setyawan, H. (2015). Pengaruh Kepemilikan Keluarga terhadap Tindakan Pajak Agresif dengan
Corporate Governance sebagai Variabel Moderatin (Studi Empiris pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Tahun 2010-2013). Confernce in Business, Accounting and Management, 2(1), 413–421.
Villalonga, B., & Amit, R. (2006). How do family ownership, control and management affect firm value? Journal of Financial Economics, 80(2), 385–417. https://doi.org/10.1016/j.jfineco.2004.12.005
Wahab, N. S. A., & Holland, K. (2012). Tax Planning, Corporate Governance and Equity Value. British Accounting Review, 44(2), 111–124. https://doi.org/10.1016/j.bar.2012.03.005
Zheng, S. (2017). Can Corporate Diversification Induce More Tax Avoidance? Journal of Multinational Financial Management, 41, 47–60. https://doi.org/10.1016/j.mulfin.2017.05.008
Aditia, N. (2013). Mengoptimalkan Pendapatan Negara. Retrieved from https://www.kemenkeu.go.id/sites/default/files/artikel_280213a.pdf
Anggraeni, R. (2018). Pengaruh Koneksi Politik terhadap Tax Aggressiveness (Studi Empiris : Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Tahun 2014-2017). Jurnal Akuntansi, 6(3), 1–15.
Armour, J., Hansmann, H., & Kraakman, R. (2009). Agency Problems, Legal Strategies, and Enforcement.
Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., & Larcker, D. F. (2015). Corporate governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), 1–17. https://doi.org/10.1016/j.jacceco.2015.02.003
Bawazier, F. (2011). Reformasi Pajak di Indonesia. Jurnal Legislasi Indonesia, 8(1), 1–12.
Bimo, I. D., Prasetyo, C. Y., & Susilandari, C. A. (2019). The Effect of Internal Control on Tax Avoidance: The Case of Indonesia. Journal of Economics and Development, 21(2), 131–143. https://doi.org/10.1108/jed-10-2019-0042
Chan, K. H., Mo, P. L. L., & Zhou, A. Y. (2013). Government Ownership, Corporate Governance and Tax Aggressiveness: Evidence from China. Accounting and Finance, 53(4), 1029–1051. https://doi.org/10.1111/acfi.12043
Chaney, P. K., Faccio, M., & Parsley, D. (2011). The Quality of Accounting Information in Politically Connected Firms. Journal of Accounting and Economics, 51, 58–76. https://doi.org/10.1016/j.jacceco.2010.07.003
Chen, S., Chen, X., Cheng, Q., & Shevlin, T. (2010). Are Family Firms More Tax Aggressive than Non-Family Firms? Journal of Financial Economics, 95(1), 41–61. https://doi.org/10.1016/j.jfineco.2009.02.003
Claessens, S., Djankov, S., Fan, J. P. H., & Lang, L. H. P. (2002). Disentangling the Incentive and Entrenchment Effects of Large Shareholdings. Journal of Finance, 57(6), 2741–2771. https://doi.org/10.1111/1540-6261.00511
Claessens, S., Djankov, S., & Lang, L. H. P. (1999). Who Controls East Asian Corporations- and the Implications for Legal Reform. Retrieved from www.worldbank. org/html/fpd/notes/
Faccio, M. (2006). Politically Connected Firms. American Economic Review, 96(1), 369–386. https://doi.org/10.1257/000282806776157704
Frank, M. M., Lynch, L. J., & Rego, S. O. (2009). Tax Reporting Aggressiveness and Its Relation to Aggressive Financial Reporting. Accounting Review, 84(2), 467–496. https://doi.org/10.2308/accr.2009.84.2.467
Hanna, & Haryanto, M. (2017). Agresivitas Pelaporan Keuangan, Agresivitas Pajak, Tata Kelola Perusahaan dan Kepemilikan Keluarga. Jurnal Akuntansi, 20(3), 407–419. https://doi.org/10.24912/ja.v20i3.6
Hartono, J. (2017). Metode Penelitian Bisnis Salah Kaprah dan Pengalaman-pengalaman (6th ed). Yogyakarta: BPFE.
Hijriani, A. N., Latifah, S. W., & Setyawan, S. (2014). Pengaruh Koneksi Politik, Dewan Komisaris dan Karakteristik Perusahaan terhadap Penghindaran Pajak (Perusahaan BUMN yang Terdaftar di Bursa Efek Indonesia). Jurnal Reviu Akuntansi Dan Keuangan, 4(1), 525–534. https://doi.org/10.22219/jrak.v4i1.4924
Hillman, A. J., Withers, M. C., & Collins, B. J. (2009). Resource Dependence Theory: A Review. Journal of Management, 35(6), 1404–1427. https://doi.org/10.1177/0149206309343469
Himawan, A. (2017). Fitra: Setiap Tahun, Penghindaran Pajak Capai Rp110 Triliun. Retrieved from https://www.suara.com/bisnis/2017/11/30/190456/fitra-setiap-tahun-penghindaran-pajak-capai-rp110-triliun
Integrity, G. F. (2019). Indonesia: Potential Revenue Losses Associated with Trade Misinvoicing. Retrieved from https://gfintegrity.org/report/indonesia-potential-revenue-losses-associated-with-trade-misinvoicing/
Jensen, M. C., & Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Agency Cost and Ownership Structure. Journal of Financial Economics, 3(4), 305–360.
Jian, M., Li, W., & Zhang, H. (2012). How Does State Ownership Affect Tax Avoidance? Evidence from China. In School of Accountancy. Retrieved from https://pdfs.semanticscholar.org/8670/e333e536f4717b8574721f75ddf96a08b06b.pdf
Kim, C., & Zhang, L. (2016). Corporate Political Connections and Tax Aggressiveness. Contemporary Accounting Research, 33(1), 78–114. https://doi.org/10.1111/1911-3846.12150
Kim, I. J., Eppler-Kim, J., Kim, W. S., & Byun, S. J. (2010). Foreign Investors and Corporate Governance in Korea. Pacific Basin Finance Journal, 18(4), 390–402. https://doi.org/10.1016/j.pacfin.2010.04.002
Kusbandiyah, A., & Norwani, N. M. (2018). The Influence of Size Firm and Ownership Structure Toward Aggressive Tax Avoidance of Manufacture Companies Listed in Indonesia Stock Exchange. Advances in Social Science, Education and Humanities Research, 231, 132–135. https://doi.org/10.2991/amca-18.2018.37
Landry, S., Deslandes, M., & Fortin, A. (2013). Tax Aggressiveness, Corporate Social Responsibility and Ownership Structure. Journal of Accounting, Ethics and Public Policy, 14(3), 611–645. https://doi.org/10.2139/ssrn.2304653
Lestari, G. A. W., & Putri, I. G. A. M. A. D. (2017). Pengaruh Corporate Governance, Koneksi Politik dan Leverage terhadap Penghindaran Pajak. E-Jurnal Akuntansi Universitas Udayana, 18(3), 2028–2054.
Lestari, P. A. S., Pratomo, D., & Asalam, A. G. (2019). Pengaruh Koneksi Politik dan Capital Intensity terhadap Agresivitas Pajak. Jurnal ASET (Akuntansi Riset), 11(1), 41–54. https://doi.org/10.17509/jaset.v11i1.15772
Lietz, G. (2013). Tax Avoidance vs Tax Aggressiveness. In Working Paper.
Lisowsky, P. (2010). Seeking Shelter: Empirically Modeling Tax Shelters Using Financial Statement Information. Accounting Review, 85(5), 1693–1720. https://doi.org/10.2308/accr.2010.85.5.1693
Mafrolla, E., & D’Amico, E. (2016). Tax Aggressiveness in Family Firms and the Non-Linear Entrenchment Effect. Journal of Family Business Strategy, 7(3), 178–184. https://doi.org/10.1016/j.jfbs.2016.08.003
Mahenthrian, S., & Kasipillai, J. (2012). Influence of Ownership Structure and Corporate Governance on Effective Tax Rates and Tax Planning: Malaysian Evidence. SSRN Electronic Journal, 0–26. https://doi.org/10.2139/ssrn.2384718
OECD. (2015). Glosarry of Statistical Terms: Corporate Governance. Retrieved January 21, 2020, from https://stats.oecd.org/glossary/detail.asp?ID=6778
Pratiwi, N. P. S. D. R., Subekti, I., & Rahman, A. F. (2019). The Effect of Corporate Governance and Audit Quality on Tax Aggressiveness withFamily Ownership as TThe Moderating Variable. International Journal of Business, Economics and Law, 19(5), 31–42. https://doi.org/10.31014/aior.1992.02.01.76
Sari, D. K., & Martani, D. (2010). Ownership Characteistics, Corporate Governance and Tax Aggressiveness. The 3rd Accounting & The 2nd Doctoral Colloquium, 27–28.
Sunaryo, S. (2016). Effect of Family Ownership towards Tax Aggressiveness on Food and Beverages Industrial Company Listed in Indonesia Stock Exchange. Binus Business Review, 7(1), 53. https://doi.org/10.21512/bbr.v7i1.1450
Supatmi, Sutrisno, T., Saraswati, E., & Purnomosidhi, B. (2019). The Effect of Related Party Transactions on Firm Performance: The Moderating Role of Political Connection in Indonesian Banking. Business: Theory and Practice, 20, 81–92.
Taylor, G., & Richardson, G. (2013). The Determinants of Thinly Capitalized Tax Avoidance Structures: Evidence from Australian Firms. Journal of International Accounting, Auditing and Taxation, 22(1), 12–25. https://doi.org/10.1016/j.intaccaudtax.2013.02.005
Ulupui, I. G., Utama, S., & Karnen, K. A. (2015). Pengaruh kepemilikan keluarga, kedekatan direksi dan komisaris dengan pemilik pengendali terhadap kompensasi direksi dan komisaris perusahaan di pasar modal indonesia. Jurnal Organisasi Dan Manajemen, 11(1), 62–74. https://doi.org/10.1016/j.fsigen.2013.08.015
Utami, W. T., & Setyawan, H. (2015). Pengaruh Kepemilikan Keluarga terhadap Tindakan Pajak Agresif dengan
Corporate Governance sebagai Variabel Moderatin (Studi Empiris pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Tahun 2010-2013). Confernce in Business, Accounting and Management, 2(1), 413–421.
Villalonga, B., & Amit, R. (2006). How do family ownership, control and management affect firm value? Journal of Financial Economics, 80(2), 385–417. https://doi.org/10.1016/j.jfineco.2004.12.005
Wahab, N. S. A., & Holland, K. (2012). Tax Planning, Corporate Governance and Equity Value. British Accounting Review, 44(2), 111–124. https://doi.org/10.1016/j.bar.2012.03.005
Zheng, S. (2017). Can Corporate Diversification Induce More Tax Avoidance? Journal of Multinational Financial Management, 41, 47–60. https://doi.org/10.1016/j.mulfin.2017.05.008
Published
2022-01-22
How to Cite
SETYASTRINI, Ni Luh Putri; SUBEKTI, Imam; PRASTIWI, Arum.
Corporate Governance, Political Connection, Family Ownership and Tax Aggressiveness in Indonesia.
Jurnal Ilmiah Akuntansi dan Bisnis, [S.l.], v. 17, n. 1, p. 146-158, jan. 2022.
ISSN 2303-1018.
Available at: <https://ojs.unud.ac.id/index.php/jiab/article/view/70311>. Date accessed: 24 apr. 2024.
doi: https://doi.org/10.24843/JIAB.2022.v17.i01.p10.
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