Citation:

Aula Fikri Hakim, Foza Hadyu Hasanatina. "Unveiling Profitability Drivers: How Size, Growth, and Capital Structure Interact with Tax Avoidance" International Research Journal of Economics and Management Studies, Vol. 3, No. 11, pp. 221-236, 2024.

Abstract:

This study investigates the interplay between company size, growth, and capital structure on profitability, emphasizing the moderating role of tax avoidance. It adopts a quantitative approach to analyze how internal company factors and tax strategies shape financial performance. The research draws on agency theory and capital structure theory to explore complex relationships, offering new insights into how tax avoidance influences the profitability dynamics of firms. The findings reveal that company size and growth significantly enhance profitability, while capital structure demonstrates a varied impact depending on tax avoidance practices. Notably, tax avoidance strengthens the positive relationship between company size and profitability, yet its role is less pronounced in moderating the effect of capital structure. This research contributes to the understanding of strategic financial management by bridging the gap between corporate growth strategies, tax planning, and profitability outcomes. The implications underscore the importance of effective tax management as a critical element in optimizing financial performance and sustaining competitive advantage.

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Keywords:

Profitability, Tax Avoidance, Company Growth, Capital Structure, Financial Strategy.