Agency Theory Perspective on Managers’ Dual Role and Tax Avoidance Determinants
Abstract
This study examines the moderating role of managerial ownership in the relationship between key financial variables and tax avoidance among manufacturing firms listed on the Indonesia Stock Exchange during 2019–2023. Using panel data regression analysis with EViews 13 on a sample of 76 firms (380 firm-year observations), diagnostic and specification tests were conducted to ensure the robustness of the model. The results show that earnings management and fiscal loss compensation significantly influence tax avoidance only in firms without managerial ownership, indicating agency driven opportunistic behavior, while transfer pricing significantly affects tax avoidance in firms with managerial ownership, suggesting strategic tax efficiency. In contrast, sales growth has no significant effect on tax avoidance in either ownership structure, whereas firm size consistently affects tax avoidance regardless of ownership. These findings support agency theory by demonstrating that ownership alignment moderates managerial behavior in corporate tax decision-making. Practically, the results provide insights for policymakers and regulators to design more effective tax compliance frameworks based on ownership structure. This study contributes novel empirical evidence on the moderating role of managerial ownership in shaping corporate tax avoidance behavior in emerging markets.
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DOI: https://doi.org/10.17509/jaset.v17i2.91392
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