The Effect of Company Characteristics on Tax Avoidance and Its Impact on Firm Value

There are two ways companies can pay taxes more effectively, namely by reducing the value of the tax by adhering to the applicable taxation regulations, said to be reducing the value of taxes by taking actions that are not in accordance with the Taxation Law or tax evasion. This study was conducted to examine the effect of company characteristics on firm value where tax avoidance is an intervening variable or a mediating factor. Sampling using purposive sampling method. The research sample consisted of 18 manufacturing companies listed on the Indonesia Stock Exchange for the period 2015 until 2018. The hypothesis was tested using partial least square software. Results showed that the company characteristics, namely profitability, had positive effect on tax avoidance. Meanwhile, leverage and firm size do not have positive effect on tax avoidance. Profitability and firm size have a positive effect on firm value. Leverage does not have positive effect on firm value. Results also show that tax avoidance has positive effect on firm value, but tax avoidance is not able to mediate the effect of profitability and leverage on firm value. Avoidance is able to provide a mediation of firm size on firm value.