Military connections, corporate governance and corporate tax avoidance

IF 2.1 Q2 BUSINESS, FINANCE
Effiezal Aswadi Abdul Wahab, Damara Ardelia Kusuma Wardani, Iman Harymawan, Mohammad Nasih
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引用次数: 0

Abstract

Purpose

This paper aims to investigate the relationship between military connections and tax avoidance in Indonesia. Further, the paper examines whether the relationship between military connections and tax avoidance is impacted by three corporate governance variables: auditor size or Big 4, board size and audit committee independence. Indonesia's settings allow for a unique investigation, as military involvement has been documented.

Design/methodology/approach

This paper uses Indonesia as the research setting because its military forces have a long history of business involvement. The sample includes 1,986 firm-year observations on the Indonesia Stock Exchange from 2010 to 2018. The period signifies the time of significant change post-Suharto to illustrate changes in military reform.

Findings

Military-connected firms recorded a negative relationship with effective tax rates, indicating higher tax avoidance. The authors extend this test by considering three corporate governance variables: Big 4, board size and audit committee independence. They find the corporate governance variables are ineffective in mitigating the positive impact of military-connected firms and corporate tax avoidance. The results remain consistent when performing endogeneity tests.

Originality/value

This paper adds to the extant literature by examining the impact of military connections on tax avoidance. The findings reflect Indonesia's institutional settings depicting military and political connections.

军方关系、公司治理和公司避税
目的 本文旨在研究印度尼西亚军方关系与避税之间的关系。此外,本文还研究了军方关系与避税之间的关系是否受三个公司治理变量的影响:审计师规模或四大、董事会规模和审计委员会的独立性。印尼的环境允许进行独特的调查,因为军队的参与已有记录。样本包括 2010 年至 2018 年印尼证券交易所的 1,986 个公司年度观测值。结果与军队有关联的公司与实际税率呈负相关,表明避税率较高。作者通过考虑三个公司治理变量扩展了这一检验:四大、董事会规模和审计委员会独立性。他们发现,公司治理变量无法有效缓解与军方有关联的公司和公司避税的积极影响。在进行内生性检验时,结果保持一致。 原创性/价值 本文通过研究军方关系对避税的影响,对现有文献进行了补充。研究结果反映了印尼的制度环境,描绘了军事和政治关系。
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来源期刊
Pacific Accounting Review
Pacific Accounting Review BUSINESS, FINANCE-
CiteScore
3.80
自引率
9.50%
发文量
36
期刊介绍: Pacific Accounting Review is a quarterly journal publishing original research papers and book reviews. The journal is supported by all New Zealand Universities and has the backing of academics from many universities in the Pacific region. The journal publishes papers from both empirical and theoretical forms of research into current developments in accounting and finance and provides insight into how present practice is shaped and formed. Specific areas include but are not limited to: - Emerging Markets and Economies - Political/Social contexts - Financial Reporting - Auditing and Governance - Management Accounting.
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