##plugins.themes.bootstrap3.article.main##

This study aims to analyze the effect of political connection and institutional ownership toward tax aggressiveness on manufacturing companies listed on Indonesia Stock Exchange. Samples for this study are 62 manufacturing companies listed between the periods of 2014 -   2018, hence obtained 310 observations. Result of this study shows that political connection of the directors and institutional ownership have positive and significant effect toward tax aggressiveness, while the political connection of the board of commissioners does not significantly affect toward the tax aggressiveness. Furthermore, this study also finds the difference of political connection and institutional ownership between big companies and small companies. The effect of political connection of the directors is stronger in small companies than big companies, while the effect of political connection of the board of commissioners toward tax aggressiveness is stronger in big companies than small companies.

Downloads

Download data is not yet available.

References

  1. Adhikari, A., Derashid, C., & Zhang, H. (2006). Public policy, political connections, and effective tax rates: Longitudinal evidence from Malaysia. Journal of Accounting and Public Policy, 25(5), 574–595. https://doi.org/10.1016/j.jaccpubpol.2006.07.001.
     Google Scholar
  2. Armstrong, C. S., Blouin, J. L., & Larcker, D. F. (2012). The incentives for tax planning. Journal of Accounting and Economics, 53(1-2), 391–411. https://doi.org/10.1016/j.jacceco.2011.04.001.
     Google Scholar
  3. Balakrishnan, K., Blouin, J. L., & Guay, W. R. (2017). Tax aggressiveness and corporate transparency. Accounting Review, 94(1), 45–69. https://doi.org/10.2308/accr-52130.
     Google Scholar
  4. Brown, J., Drake, K., & Wellman, L. (2014). The benefits of a relational approach to corporate political activity: Evidence from political contributions to tax policymakers. The Journal of the American Taxation Association, 37(1), 69–102.
     Google Scholar
  5. Bushee, B. J. (2001). Do Institutional Investors Prefer Near-Term Earnings over Long-Run Value?. Contemporary Accounting Research, 18(2), 207–246. https://doi.org/10.1506/J4GU-BHWH-8HME-LE0X.
     Google Scholar
  6. Chen, S., Chen, X., Cheng, Q., & Shevlin, T. (2010). Are family firms more tax aggressive than non-family firms?. Research Collection School of Accountancy, 91(1), 41–61.
     Google Scholar
  7. Chen, X. (2018). Corporate Social Responsibility Disclosure, Political Connection and Tax Aggressiveness: Evidence from China’s Capital Markets. Journal of Business and Management, 6(1), 151–164. https://doi.org/10.4236/ojbm.2018.61010.
     Google Scholar
  8. CNN Indonesia. (2016). Panama Papers dan Praktik Penghindaran Pajak. From www.cnnindonesia.com. Website: https://www.cnnindonesia.com/ekonomi/20160412112445-79-123307/panama-papers-dan-praktik-penghindaran-pajak.
     Google Scholar
  9. Dyreng, S. D., Hanlon, M., & Maydew, E. L. (2008). Long-run corporate tax avoidance. Accounting Review, 83(1), 61–82. https://doi.org/10.2308/accr.2008.83.1.61.
     Google Scholar
  10. Goldman, E., Rocholl, J., & So, J. (2009). Do politically connected boards affect firm value. Review of Financial Studies, 22(6), 2331–2360. https://doi.org/10.1093/rfs/hhn088.
     Google Scholar
  11. Gupta, S., & Newberry, K. (1997). Determinants of the variability in corporate effective tax rates: Evidence from longitudinal data. Journal of Accounting and Public Policy, 16(1), 1–34. https://doi.org/10.1016/S0278-4254(96)00055-5.
     Google Scholar
  12. Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50(2-3), 127–178. https://doi.org/10.1016/j.jacceco.2010.09.002.
     Google Scholar
  13. Iswari, P., Sudaryono, E. A., & Widarjo, W. (2019). Political connection and tax aggressiveness: A study on the state-owned enterprises registered in Indonesia stock exchange. Journal of International Studies, 12(1), 79–92. https://doi.org/10.14254/2071-8330.2019/12-1/5.
     Google Scholar
  14. Kemenkeu.go.id. (2019). Target dan Realisasi Penerimaan Pajak Tahun 2010 – 2020. From www.kemenkeu.go.id. Website: https://kemenkeu.go.id/target-dan-realisasi-penerimaan-pajak-tahun-2010-2020/.
     Google Scholar
  15. Khurana, I. K., & Moser, W. J. (2009). Institutional Ownership and Tax Aggressiveness. SSRN Electronic Journal, 0–42. https://doi.org/10.2139/ssrn.1464106.
     Google Scholar
  16. Kim, C., & Zhang, L. (2016). Corporate Political Connections and Tax Aggressiveness. Contemporary Accounting Research, 33(1), 115–120. https://doi.org/10.1111/1911-3846.12214.
     Google Scholar
  17. Kubick, T. R., & Lockhart, G. B. (2017). Corporate tax aggressiveness and the maturity structure of debt. Advances in Accounting, 36, 50–57. https://doi.org/10.1016/j.adiac.2016.10.001.
     Google Scholar
  18. Lanis, R., & Richardson, G. (2012). Corporate social responsibility and tax aggressiveness: An empirical analysis. Journal of Accounting and Public Policy, 31(1), 86–108. https://doi.org/10.1016/j.jaccpubpol.2011.10.006.
     Google Scholar
  19. Leuz, C., & Oberholzer-Gee, F. (2006). Political relationships, global financing, and corporate transparency: Evidence from Indonesia. Journal of Financial Economics, 81(2), 411–439. https://doi.org/10.1016/j.jfineco.2005.06.006.
     Google Scholar
  20. Li, C., Wang, Y., Wu, L., & Xiao, J. Z. (2016). Political connections and tax-induced earnings management: evidence from China. European Journal of Finance, 22(4-6), 413–431. https://doi.org/10.1080/1351847X.2012.753465.
     Google Scholar
  21. Milyo, J., Primo, D., & Groseclose, T. (2000). Corporate PAC Campaign Contributions in Perspective. Business and Politics, 2(1), 75–88. https://doi.org/10.2202/1469-3569.1004.
     Google Scholar
  22. Moore, J. A. (2012). Empirical evidence on the impact of external monitoring on book-tax differences. Advances in Accounting, 28(2), 254–269. https://doi.org/10.1016/j.adiac.2012.06.002.
     Google Scholar
  23. Plesko, G. A. (2002). Reconciling Corporation Book and Tax Net Income, Tax Years 1996-1998. SOI Bulletin, 21(4), 1–16.
     Google Scholar
  24. Pranoto, B. A., & Widagdo, A. K. (2016). Pengaruh Koneksi Politik Dan Corporate Governance Terhadap Tax Agressiveness. Syariah Paper Accounting FEB UMS, 1(3), 472–486.
     Google Scholar
  25. Shleifer, A., & Vishny, R. W. (2002). The Grabbing Hand: Government Pathologies and Their Cures. Harvard University Press.
     Google Scholar
  26. Sudaryono, E. A., Rahmawati, Djuminah, Wartono, & Widarjo, W. (2019). Relationship of political connection and tax aggressiveness: Empirical evidence from Indonesia. International Journal of Economic Policy in Emerging Economies, 12(5), 453–465.
     Google Scholar
  27. Wahab, E. A. A., Ariff, A. M., Marzuki, M. M., & Sanusi, Z. M. (2017). Political connections, corporate governance, and tax aggressiveness in Malaysia. Asian Review of Accounting, 25(3), 424–451. https://doi.org/10.1108/ARA-05-2016-0053.
     Google Scholar
  28. Wei, Z., Xie, F., & Zhang, S. (2005). Ownership Structure and Firm Value in China’s Privatized Firms: 1991-2001. Journal of Financial and Quantitative Analysis (JFQA), 40(1), 87–108.
     Google Scholar
  29. Ying, T., Wright, B., & Huang, W. (2017). Ownership Structure and Tax Aggressiveness of Chinese Listed Companies. International Journal of Accounting & Information Management, 25(3), 313–332. https://doi.org/10.1108/IJAIM-07-2016-0070.
     Google Scholar
  30. Zhang, H., Li, W., & Jian, M. (2012). How does state ownership affect tax avoidance? Evidence from China. Singapore Management University, School of Accountancy, 13-18.
     Google Scholar