Citation:

Sendy Abiemanyu, Andrian Budi Prasetyo. "Do Financial Distress, Firm Characteristics, and Temporary Difference Influence the Manufacturing Companies Tax Avoidance?" International Research Journal of Economics and Management Studies, Vol. 2, No. 4, pp. 323-330, 2023.

Abstract:

Maximizing tax revenue is a challenging task for policymakers and economists, with corporate tax avoidance a significant concern in this complex environment. The current study thoroughly investigates the relationship between financial hardship, business attributes, such as size, leverage, capital intensity, growth opportunity, and tax-related temporary differences to dive into the complex dynamics at play. The analysis spans the four years from 2018 to 2021 and includes the full range of manufacturing businesses listed on the Indonesia Stock Exchange (IDX). The empirical basis is built by applying the purposive sampling technique and a carefully selected subset of 266 data points from 70 manufacturing companies. The use of multiple regression analysis carried out using IBM SPSS 26 as the analytical tool is the foundation of the empirical investigation. The empirical findings furnish valuable insights. The findings are intriguing because they highlight how financial distress and leverage positively affect tax avoidance. In contrast, firm size and temporary difference negatively correlate with tax avoidance. Notably, although expected to have a considerable impact, capital intensity and growth opportunity characteristics do not significantly affect tax avoidance behavior.

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Keywords:

Financial Distress, Firm Characteristics, Temporary Difference, Tax Avoidance.