Title: DETERMINANTS OF VARIABILITY IN TAX AVOIDANCE AND OWNERSHIP PATTERNS ON FIRM VALUE IN INDONESIAN EVIDENCE
Author:
Nera Marinda Machdar
Abstract:
This study aims to analyze the effect of corporate tax avoidance and ownership patterns on firm value. The sample derives from the LQ45 Index category listed on the Indonesia Stock Exchange during 2019-2024. The sample uses a purposive sampling method. The LQ45 Index is a market capitalization weighted index apprehend 45 most liquid common stock firms listed on the Indonesia Stock Exchange. This study utilizes a fixed effect model as an estimation of the exact equation model in panel data regression. The results of this study show that (a) effective tax rate (ETR) has a negative effect on firm value; (b) book-tax difference (BTD) has a positive effect on firm value; (c) management ownership has a negative effect on firm value, and; (d) institutional ownership has a positive effect on firm value.This study has an implication from a theoretical perspective, i.e. the ownership pattern provides a mixed results to firm value, in particular institutional ownership affect positively on firm value, while managerial ownership affects negatively on firm value. The negative effect of managerial ownership on firm value due to the small equity share of the managers should be associated with low market valuations due to higher agency cost. Moreover, corporate tax avoidance provides a mixed result to firm value, specifically by using effective tax rate and book tax avoidance as a measurement.
Keywords: Firm value, corporate tax avoidance, ownership patterns.
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