Volume 4, Number 2, February 2023 e-ISSN: 2797-6068 and p-ISSN: 2777-0915
Email: [email protected], [email protected]
|
KEYWORDS Thin Capitalization, Fixed Asset
Intensity, Institutional Ownership, Tax Avoidance |
ABSTRACT In this study, the authors
are interested in examining how the thin capitalization and fixed asset
intensity influence tax avoidance with institutional ownership as a
moderating variable. Population of all manufacturing companies in the
consumer industry sector listed on the Indonesia Stock Exchange from 2018 to
2021 which found 192 samples, according to the criteria needed in this study
that were sampled for 2018 to 2021. The results that thin capitalization has
a positive effect on tax avoidance, fixed asset intensity has a positive
effect on tax avoidance. For the moderating variable, institutional ownership
is not able to weaken the effect of thin capitalization on tax avoidance and
institutional ownership is not able to weaken the effect of fixed asset
intensity on tax avoidance |
INTRODUCTION
The COVID-19 pandemic has had a significant impact on the global economy,
including the tax sector. Revenues from the tax sector will decline and
economic growth will slow down, government revenues will decrease and
government spending will increase, so various government efforts are needed to
save health and the economy. Focus on spending on health, social safety net and
economic recovery, including for businesses and communities affected by the
pandemic. The state and relevant institutions must immediately take steps to
save the stability of the national economy and financial system through various
incentive measures related to the implementation of the State Budget (APBN).
The existence of government policies in the form of tax incentives is
expected to help reduce the burden on companies and increase cash flow during
the COVID-19 pandemic, but this incentive can be misused by managers in
carrying out tax avoidance practices by exploiting loopholes from the latest
tax regulations. The company will stick to its goal of minimizing the tax
burden because the higher the company's profit, the higher the tax burden that
must be paid by the company, this becomes a problem for the company and makes
the company take tax avoidance actions.
The government expects all taxpayers to always fulfill their tax
obligations and not reduce the tax burden paid, but in reality
there are still many taxpayers who do not fulfill their tax obligations,
especially in companies that have tax obligations of great value. Taxpayers are
trying to pay as little tax as possible, while the government wants as much tax
revenue as possible to fund the government, including one of them to fund the
handling of COVID-19.
THEORETICAL
FOUNDATIONS AND HYPOTHESIS DEVELOPMENT
Theoretical Framework
Agency Theory
Agency theory is an agency contractual
relationship that arises between two parties, namely the principal and the
agent. In corporate agency theory, this is done by transferring management
tasks from the owner (shareholder) to the manager. The owner has limitations to monitor the
agent in some situations, agency theory assumes that all parties act in their
own interests, in which case the owner wants the management to manage his
wealth well whereas the management wants to increase the company's profits (Jensen & Meckling, 1976).
Agency theory assumes that tax evasion exists
in companies because there is a difference of interest between the principal
and the agent, which can lead to tax avoidance. Managers who make the decision
to do tax avoidance is one of the problems arising from agency teori. A cheap source of financing for companies is tax
savings from tax avoidance and providing a large financial benefit to the
company. Managers take these decisions to balance the wishes of business owners
who want to make a profit by maximizing the company's profits, but want low tax
costs for shareholders so that the dividend rate paid remains high but the
profits generated remain low.
The relationship of
agency theory to tax avoidance is that management with high profits wants to
increase compensation, whereas shareholders want to reduce the tax burden
through low profits. As a manager,
management must also try to find solutions to resolve these conflicts of
interest, so that management always tries to maintain and increase the value of
the company in the principal ma, in various ways, one of which is by minimizing
the company's tax burden through actions tax avoidance (Prastiwi & Ratnasari, 2019).
Agency issues are increasingly
impacted when principals do not regularly monitor management performance, which
can threaten thecompany's in-person. Therefore,
optimal and effective control and monitoring are needed continuously related to
the performance of subsequent management.
The principal requires the agent to report the state of the company in
accordance with the actual circumstances, and the information provided may be
in the form of disclosure of accounting information such as financial
statements. It serves as an important means of monitoring the performance of
agents and ensuring that the invested capital is well developed.
Tax Avoidance
Tax avoidance is a legally legal action, it is a legitimate action because
it does not violate tax laws, but this tax avoidance is a unique thing, because
on the one hand it is legalized but on the other hand this tax avoidance is not
really avoided by the government, because it has an impact on state
revenue. Although tax regulations are
not violated, they can reduce state tax revenue. The government knows that legally taxed companies
are trying to avoid taxes in various ways to make taxes lower (Christiantyo & Fahria, 2021).
Thin Capitalization
Thin Capitalization
is a condition in which a company's capital structure is formed with ownership
of more debt than capital. In the Income
Tax Law Article 18 paragraph (1) provides that the Minister of Finance is authorized
to decide on the comparison between hdebt and company
capital for tax calculations. The ratio of determining the ratio of debt and
capital refers to the Regulation of the Minister of Finance No. 169/PMK.010/2015
to determine corporate income tax when calculating income tax, which is a
maximum of four to one (4:1) (Sonia & Suparmun, 2019).
Fixed Asset Intensity
Fixed assets are company assets that support
the company's operating activities and have an economic life which includes
depreciation used as a tax deduction. Intensity can be described as an activity
that is often carried out by individuals or groups. Fixed assets used in
manufacturing, sales or services to generate income and cash flow for more than
one period because the useful life of an asset of more than one year requires a
deposition as a cost allocation over the economic life of the asset. In this
case, the company as a group or large organization uses fixed assets as an
investment method and can improve its operational activities to make its activities
more efficient, such as machines used
for production activities (Nugroho, Mulyanto, & Afifi, 2022).
Institutional Ownership
Institutional ownership plays a very important role in minimizing agency
conflicts between managers and shareholders. The existence of institutional
investors can be said to be an effective control mechanism for every decision
made by the managers of companies that control many shares, including the bank
sector, insurance companies, investments, and others. Institutional ownership
acts in their interests, not judiciously and fairly in the interests of
shareholders. In the existence of institutional ownership, institutional
shareholders intervene in managementto generate
returns i.e. with as many dividends as possible (Arianandini & Ramantha, 2018)
Hypothesis
Development
The Effect of Thin
Capitalization on Tax Avoidance
In reference to the impact of the COVID-19 pandemic which has caused
Indonesia to experience an economic slowdown, the company will manage its debt
in such a way as to avoid the risk of bankruptcy. Therefore, it is necessary to
re-examine the effect of thin capitalization on tax avoidance. Thecompany tries to save costs by trying to keep costs as
low as possible and keeping them as long as possible, ifthis
is not enough, the next step is to take out loans or debts to generate new
income. Assets and sources of funds are used by the company to increase fixed
costs to increase returns for shareholders. This can cause the company's profit
to decrease, so the taxes paid will also be reduced. High interest costs hinder
the company's efforts to carry out tax avoidance.
This research is in line with research that has been carried out by (Nadhifah & Arif, 2020), (Jumailah, 2020) and (Utami & Irawan, 2022) found a positive relationship between thin capitalization and tax
avoidance, basedon theoretical explanations and the
results of previous research are as follows:
Hypothesis 1: Thin
capitalization positively affects tax avoidance
The Effect of Fixed Asset Intensity on Tax Avoidance
Agency theory can motivate agents to
increase corporate profits because companies with large assets have a lower tax
burden compared to companies with smaller assets. The company benefits from the
company's paid scrutiny. As per PSAK No. 16/2007, fixed assets are tangible
assets acquired in a ready-to-use or ready-to-build state, used in the conduct
of business, which are not intended to be sold in carrying out the usual
business activities of the company and which have an economic life of more than
one year. Companies with fixed assets
charge depreciation in a way that reduces the
company's profits, because the greater the intensity of fixed assets, the lower the level
of tax
avoidance, so that companies
with Large fixed assets will pay lower taxes.
In line with the research conducted by (Hafizh & Africa, 2022) and (Firmansyah & Syahputra, 2022) which concluded that
the intensity of fixed assets has a positiveeffect
on tax avoidance, based on the
explanation of the theory and the results of previous research are as follows:
Hypothesis 2: The
intensity of fixed assets positively affects tax avoidance
Institutional Ownership can moderate the Effect of Thin Capitalization On Tax Avoidance
The application of corporate governance principles can reduce tax avoidance
measures and supervise company management through institutional ownership. Ownership of shares by institutions
encourages more optimal control. Large shareholdings by institutional investors
increase control and thus prevent opportunistic behavior by managers. The size
of institutional investor ownership plays a role in disciplining, disciplining
and monitoring management behavior, so that the level of institutional
ownership of the company affects company policy.
Managing a company as a cost agent seeks to manage its taxes in such a way
that the agent's performance bonus does not decrease when the company's profits
decline. Agents try to avoid taxes, one of which is undercapitalization, while
institutional ownership tries to maintain reputation and ethics so as not to
cause problems in the future. Institutionally owned companies demonstrate their
ability to control management. The existence of institutional ownership as part
of the company's management system is a means to protect management from
opportunistic actions that can be carried out by management in the
implementation of tax avoidance activities (Olivia & Dwimulyani, 2019).
Inline with the research that has been carried out by (Olivia & Dwimulyani, 2019), (Jumailah, 2020) and (Sonia & Suparmun, 2019) found that institutional ownership can weaken the influence of thin
capitalization on tax avoidance, basedon theoretical
explanations and the results of previous research are as follows:
Hypothesis 3:
Institutional ownership weakens the positive effect of thin capitalization on
tax avoidance.
Institutional Ownership can moderate the Effect of Fixed Asset Intensity On Tax Avoidance
Institutional ownership is a condition that indicates that foreign
institutions, financial institutions, legal entities, funds, governments and
other institutions own shares of the company. Agene seeks to control the tax
burden in such a way that they do not reduce the agent's efficiency bonus by
allowing the tax burden to reduce the company's profits. Therefore, agents tend
to engage in aggressive tax avoidance activities. When institutional ownership
becomes part of the corporate governance system, the company is expected to
balance shareholder capital and capital investment in the capital structure.
The existence of institutional ownership as a form of good corporate governance
is one element that can undo the manager's intention to make aggressive efforts
in managing the company's tax burden, meaning that a well-managed company
reduces the manager's chances of evading taxes.
Agency theory concludes that the existence of differences in interests
between principals and agents leads to asymmetry of informasi
(Jensen & Meckling, 1976), in which
institutional ownership of the company is responsible for monitoring all
actions of the company's management in order to avoid improper regulation and a
means to control the management of opportunistic actions carried out by
managers like doing tax avoidance.
This research is in line with research that has been carried out by (Noviyani & Muid, 2019) and (Yunistiyani & Tahar, 2017) found that institutional ownership can weaken the positive influence of
fixed asset intensity on tax avoidance, basedon
theoretical explanations and the results of previous research are as follows:
Hypothesis 4:
Institutional ownership weakens the positive influence of fixed asset intensity
on tax avoidance.
Conceptual Framework
Figure 1 Conceptual
Framework
RESEARCH METHOD
This study is
intended to determine the effect of th incapitalization and intensity of fixed assets on tax
avoidance moderated by ownership. The analysis unit used in this study is a
company listed on the Indonesia Stock Exchange with a period of 2018-2021. This
research is quantitative and the acquisition of secondary data obtained through
financial reports, annual reports and company sustainability reports are used
as samples that have gone through the purposive samplig
stage.
Dependent Variable
Tax avoidance here is calculated using Effective Tax
Rates (ETR). The independent variabel owned shows the value of the negative coefficient
to ETR, it can be interpreted as having a positive relationship with tax
avoidance and vice versa (Febrianti, 2020) which is formulated as
follows:
Independent Variable
1.
Thin Capitalization
Thin Capitalization is measured using the Debt to Equity
Ratio (DER) proxy (Yulianty et al, 2021) which is formulated as follows:
2.
Fixed Asset Intensity
Return on Assets measurement is measured using a ratio scale formulated as follows:
Moderation Variable
Institutional Ownership
The proportion
of institutional ownership is measured by the percentage of shares held by
institutional investors in a company. The measurement of institutional ownership is measured using a ratio scale
formulated as follows:
Control Variables
1.
Profitability
Profitability is one of the measurements for the
performance of a company as measured by Return on Assets (ROA) which is
formulated as follows:
2.
Company Size
Company size can be defined as the size of a company with
an overview of the number of assets owned by the company (Noviyani
& Muid, 2019) formulated as follows (Noviyani & Muid, 2019)
3.
Inventory Intensity
The intensity of inventory used in this study is a
measuring instrument developed by research conducted by (Suciati
& Wulandari, 2022) which is formulated as
follows:(Suciati &
Wulandari, 2022)
Data Description
The population in this study is all consumer
goods industry companies listed on the Indonesia Stock Exchange for the
2018-2021 period. The data analysis method in this
study is panel data regression analysis. Sampel in this study was obtained using the purposive sampling method during the observation period with unbalance panel
data, obtained the number of samples observed as many as 192. Here are the
results of the sample selection carried out:
Table 1
Criteria and Number of Samples
|
Sample Determination Criteria |
Year |
Total |
|||
|
2018 |
2019 |
2020 |
2021 |
||
|
1. Companies listed on the IDX for the 2018-2021 period |
88 |
88 |
88 |
88 |
352 |
|
2. Companies that experienced losses during 2018-2021
due to ETR ratios |
(34) |
(34) |
(34) |
(34) |
(136) |
|
3. Companies that were delisted during the observation
period |
(2) |
(2) |
(2) |
(2) |
(8) |
|
4. Companies that are suspended during the observation
period |
(1) |
(1) |
(1) |
(1) |
(4) |
|
5. Companies that do not have a tax income burden |
- |
- |
(1) |
(2) |
(3) |
|
6. Companies that do not have institutional ownership
shares |
(2) |
(2) |
(2) |
(3) |
(9) |
|
Samples of companies according to criteria |
49 |
49 |
48 |
46 |
192 |
|
Source : Data Processed |
|
||||
Descriptive Statistical Analysis
Table 2
Descriptive Statistics
|
Variable |
N |
Minimum |
Maximum |
Mean |
Std.Dev |
|
Tax Avoidance |
192 |
0,026215 |
2,940805 |
0,324595 |
0,355302 |
|
Thin Capitalization |
192 |
0,106893 |
9,355108 |
1,065853 |
1,065478 |
|
Fixed Asset Intensity |
192 |
0,051051 |
0,949916 |
0,466566 |
0,208197 |
|
Profitability |
192 |
-0,019677 |
0,466601 |
0,085648 |
0,080440 |
|
Company Size |
192 |
21,14429 |
32,82039 |
29,31306 |
1,541767 |
|
Inventory Intensity |
192 |
0,014823 |
0,558055 |
0,197253 |
0,120656 |
|
Source : Data Processed |
|
||||
It can be seen in Table 2, that
tax avoidance shows a variation value between the minimum value of 0.026215 to
the maximum value of 2.940805. The minimum value is at a ratio of 0.026215
obtained by PT Kimia Farma Tbk
in 2021 and a maximum value of 2.940805 obtained by PT Malindo
Feedmill Tbk in 2020.
It can be seen inT abel 2, that Thin
Capitalization shows the value of variation between the minimum value of
0.106893 to the maximum value of 9.355108. The minimum value is at a ratio of
0.106893 obtained by PT Unilever Indonesia Tbk in
2018 and the maximum value of 9.355108 obtained by PT FKS Multi Agro Tbk in 2020.
It can be seen in Table 2, that
the Intensity of Fixed Assets shows the value of the variation between the
minimum value of 0.051051 to the maximum value of 0.949916. The minimum value
is at a ratio of 0.051051 obtained by PT Hartadinata
Abadi Tbk in 2021 and a maximum value of 0.949916
obtained by PT Hartadinata Abadi Tbk
in 2019
It can be seen in Table 2, that
the Return on Assets shown by the ROA proxy shows the value of variation
between the minimum value of -0.019677 to the maximum value of 0.466601. The
minimum value is at the ratio of -0.019677 obtained by PT Sampoerna
Agro Tbk in 2020 and the
maximum value of 0.466601 obtained by PT Unilever Indonesia Tbk
in 2018. The average value on the variable ROA is 0.085648 with a standard
deviation of 0.080440.
It can be seen in Table 2, that
the Company Size shown by the SIZE proxy shows the value of variation between
the minimum value of 21.14429 to the maximum value of 32.82039. The minimum
value is at a ratio of 21.14429 obtained by PT Delta Djakarta Tbk in 2018 and a maximum value of 32.82039 obtained by PT
Indofood Sukses Makmur Tbk in 2021. The mean value on the SIZE variable is
29.31306 with a st.
deviation of 1.541767.
It can be seen in Table 2, that
the Inventory Intensity shown by the IP proxy shows a variation value between
the minimum value of 0.014823 to the maximum value of 0.558055. The minimum
value is at a ratio of 0.014823 obtained by PT Nippon Indosari
Corpindo Tbk in 2018 and a
maximum value of 0.558055 obtained by PT Gudang Garam Tbk
in 2018. The average value on the variable IP is 0.197253 with a standard
deviation of 0.120656.
Panel Data Model
Analysis
Table 3
Chow Test
|
Effect Test |
Statistics |
d.f |
Prob |
|
Cross-section F |
2,662542 |
(48,136) |
0,0000 |
|
Cross-section
Chi-square |
127,208453 |
28 |
0,0000 |
|
Source : Data Processed |
|||
The results of the chow test in
table 5 show that the probability value of cross section chi square is 0.0000
< 0.05 (alpha 5%) then Ha (fixed effect model) is accepted, so there are
differences in characteristics both individually and between periods.
Tabel 4
Hausman Test
|
Test Summary |
Chi-Sq. Statistics |
Chi-Sq. d.f. |
Prob |
|
Cross-section
random |
15.507926 |
7 |
0,0300 |
|
Source : Data Processed |
|||
The results from table 4.4 above
show the probability of a random Cross-section of 0.0300, meaning that Ho is
rejected and Ha is accepted. So it can be concluded
that based on the results of the hausman test, the
right model is a fixed effect model.
Hypothesis Testing
Tabel 5
Hypothesis Test
|
Variable |
Direction |
Coefficient |
Sig |
Conclusion |
|
|
Independent |
|||||
|
Thin Capitalization |
- |
0,198113 |
0,0225 |
H1 Accepted |
|
|
Fixed Asset
Intensity |
- |
0,076964 |
0,0106 |
H2 Accepted |
|
|
Moderation |
|||||
|
Thin
Capitalization* Institutional Ownership |
- |
-0,230772 |
0,2741 |
H3 Rejected |
|
|
Intensity of Fixed
Assets * Institutional Ownership |
+ |
0,193250 |
0,3698 |
H4 Rejected |
|
|
Control |
|||||
|
Profitability |
- |
-1,066324 |
0,0603 |
|
|
|
Company Size |
- |
-0,022201 |
0,6350 |
|
|
|
Inventory Intensity |
- |
-0,042144 |
0,9600 |
|
|
|
Constant |
+ |
1,008481 |
0,4714 |
|
|
|
Adjusted R Square |
0,341294 |
|
|||
|
Test F |
0,000001 |
|
|||
|
Source: Data Processed |
|
||||
Based on Table 5, the regression model obtained is:
ETR = 1.008481 - 0.198113DER - 0.076964IAT - 0.230772DER*KI +
0.193250IAT*KI - 1.066324ROA - 0.022201SIZE - 0.042144IP
Coefficient of Determination Test
The results of the Determination coefficient Test are
presented in Tabel 3 as follows:
Table 3
Coefficient of Determination Test Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Root MSE |
0.242696 |
R-squared |
0.530973 |
|
|
Mean dependent var |
0.324595 |
Adjusted R-squared |
0.341294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Test F
The results of the F test are presented in Table 4 as
follows:
Table 4
F Test Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Hannan-Quinn criter. |
0.974115 |
F-statistics |
2.799314 |
|
|
Durbin-Watson stat |
3.638234 |
Prob(F-statistic) |
0.000001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
t-test
The results of panel data regression analysis using fixed effect models are
shown in Table 5 as follows:
Table 5
t-Test Results
|
Variables |
Coefficient |
Std. Error |
t-Statistics |
Prob. |
|
Thin Capitalization |
-0.198113 |
0.326470 |
-0.606833 |
0.0450 |
|
Fixed Asset Intensity |
-0.076964 |
0.514336 |
-0.149638 |
0.0213 |
|
Thin Capitalization*Institutional Ownership |
-0.230772 |
0.383300 |
-0.602065 |
0.5481 |
|
Intensity of Fixed Assets*Institutional
Ownership |
0.193250 |
0.580272 |
0.333033 |
0.7396 |
|
Profitability |
-1.066324 |
0.562878 |
-1.894416 |
0.0603 |
|
Company Size |
-0.022201 |
0.046662 |
-0.475783 |
0.6350 |
|
Inventory Intensity |
-0.042144 |
0.839181 |
-0.050220 |
0.9600 |
|
C |
1.008481 |
1.396368 |
0.722217 |
0.4714 |
DISCUSSION
Effect of Thin Capitalization on Tax Avoidance
The results of the analysis
presented in table 5 explain that thin capitalization has a positive effect on
tax avoidance. Thin Capitalization has a regression coefficient of -0.176912
with a significance level of 0.0247. The direction of the regression
coefficient in this variable indicates that thin c apitalization
has a positive relationship with tax avoidance and significance of value less
than 0.05 indicates that thin capitalization mehas a
significant influence and H1 is accepted.
The results of this study support
previous research conducted by Andawiyah et al.
(2019); Jumailah (2020); and Utami
& Irawan (2022) who stated that thin capitalization
negatively affects tax avoidance. This explains that the higher the thin
capitalization experiences a high increase, the higher the interest expense
that must be paid, which will certainly reduce the company's profit and
ultimately reduce the income tax owed.
Effect of Fixed Asset Intensity on Tax Avoidance
The results presented in table 5
explain that the intensity of assets has a positive effect on tax
avoidance. The asset intensity has a regression coefficient of -0.077669 with
a significance level of 0.0311. The direction of the regression coefficient in
this variable indicates that the intensity of the asset t etap
has a positive relationship with tax avoidance and the significance of being
worth less than 0.05 indicates that the intensity of the asset t etap mehas a significant
influence and H2 is accepted.
The results of this study support
previous research conducted by Sari & Nursyirwan
2021); Hafizh & Africa (2022); and Lukito & Oktaviani (2022) who
stated that the intensity of t etap assets negatively
affects tax avoidance. This explains that, if it is a company with high fixed
assets, it will pay less tax burden than a company with a low amount of fixed
assets. Due to the high level of the company's fixed assets, the company will
try to do tax planning to minimize tax payments and the higher the company's
fixed asset investment, the smaller its efforts to do tax avoidance.
The Effect of Institutional Ownership in moderating Thin Capitalization on
Tax Avoidance
The results presented in table 5
explain that ownership of institusional can weaken
the effect of thin capitalization on the avoidance of pjak.
Variabel moderation of institutional ownership has a
regression coefficient of -0.209388 with a significance level of 0.5614. The
direction of the regression coefficient in this variable suggests that
institutional ownership has a negative relationship in moderating the influence
of thin capitalization on Tax Avoidance and significance greater than 0.05
indicates that institutional ownership is incapable weaken the effect of thin
capitalization on the avoidance of pajak and H3 ditolak.
The results of this study support
previous research conducted by Olivia
& Dwimulyani (2019) and Cahyani et al. (2021) which states
institutional ownership is unable to weaken the effect of thin capitalization
on the avoidance of pjak. This explains that if the size or size of institutional ownership isnot able to weaken the influence of thin capitalization
on the level of tax avoidance, because institutional ownership acts as the
controlling party The company is not necessarily able
to provide good control over management's actions over its opportunistic
behavior in carrying out tax evasion.
This is due to the lack of resources
of institutional owners and only focusing on the number of shares they own.
Institutional shareholders do not exercise their authority properly in supervising and
controlling decisions made by managers in tax avoidance of paid interest
expense and taxable income.
The Effect of Institutional Ownership in moderating the Intensity of Fixed
Assets on Tax Avoidance
The results presented in table 5 explain that
institutional ownership can weaken the effect of asset intensity on avoidance
of pjak. Variabel
moderation of institutional ownership has a regression coefficient of 0.159877
with a significance level of 0.7695. The direction of the regression
coefficient in this variable suggests that institutional ownership has a
positive relationship in moderating the influence of asset intensity on Tax
Avoidance and significance valued greater than 0.05 indicates that ownership
institutional is unable to weaken the effect of tetap
asset intensity on the avoidance of pajak and H4
rejected.
The results of this study support
previous research conducted by Vina
et al. (2022) which stated that institutional ownership is not able to
weaken the influence of thin capitalization on the avoidance of pjak. This explains that if the size or size of
institutional ownership is not able to
weaken the influence of asset intensity on the level of tax avoidance, because
Institutional ownership has entrusted the supervision and management of the
company to the Board of Commissioners, so that the size or size of
institutional ownership is not able to weaken the influence of fixed asset
intensity on the level of tax avoidance. The presence of institutional
ownership does not succeed in encouraging managers to align the interests of
managers and shareholders, management activities that occur in the company
cannot be influenced by the composition of institutional ownership because
profit management is unable to minimize the cost of the intensity of the
company's fixed assets to avoid corporate tax significantly.
There are other indications that
the presence of institutional investors has provided information about tax
planning and the agent has met investor expectations so that the company's
management is able to plan taxes effectively without violating applicable laws
and regulations, so that institutional investors do not have to worry about
intervening in the company's tax avoidance actions.
CONCLUSION
Based on the results of the analysis and
discussion, it can be concluded that thin capitalization and intensity have a
negative influence on tax avoidance and the moderation of institutional ownership shows
that institutional ownership is not able
to weaken negative influences. Thin capitalization and intensity have an
influence on tax avoidance.
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