THE EFFECT OF MANAGEMENT OWNERSHIP, EARNINGS MANAGEMENT, AND POLITICAL CONNECTION ON MANUFACTURING COMPANY’S TAX AVOIDANCE IN INDONESIA

Sari, Gladis Nurlita (2024) THE EFFECT OF MANAGEMENT OWNERSHIP, EARNINGS MANAGEMENT, AND POLITICAL CONNECTION ON MANUFACTURING COMPANY’S TAX AVOIDANCE IN INDONESIA. S1 thesis, UNIVERSITAS ATMA JAYA YOGYAKARTA.

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Abstract

The purpose of this study is to examine whether managerial ownership, earnings management, and political connections within companies influence the level of tax avoidance practices in manufacturing companies in Indonesia. This research aims to identify the causes of high tax avoidance cases and increasing the compliance level of tax in the manufacturing sector in Indonesia. The type of data used is secondary data archive from the annual report of the sample company. The report was obtained from the company official website and the website of Indonesian Stock Exchange (IDX). The proxy used to measure tax avoidance is Generally Accepted Accounting Principles Effective Tax Rate (GAAP ETR), management ownership uses the percentage of share owned by management, earning management uses discretionary accrual, and political connection measured by the percentage of boards member that have political connection. Control variables included is Return on Assets. The sample was selected using purposive sampling, and the data used for analysis was 165 manufacturing companies in Indonesia from 2020 to 2022. The analytical tool used to test variables is GRETL. The results of this study indicate there is no significant relationship between management ownership and tax avoidance of manufacturing companies in Indonesia. Meanwhile, this research found that there is a negative and significant relationship between the earnings management variable and the political connection variable on tax avoidance in manufacturing companies in Indonesia.

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