Analysis of Tax Avoidance Effect on Firm Value (A Study on Firms Listed on Indonesia Stock Exchange)

摘要

There are many factors that can affect firm value, including taxation. Taxes paid by firms to the government is a quite significant burden that firms often commit tax avoidance in order to minimize tax expense. The objective of this research is to examine the effect of tax avoidance committed by firms on the value of firms listed on Indonesia Stock Exchange in 2009-2016. The proxy for firm value in this research is Price to Book Value per Share (PBVS), while the proxy for tax avoidance is Effective Tax Rates (ETR). The final samples used in this study include 2,276 observations. From the result of fixed effect method unbalanced panel data regression, it can be concluded that tax avoidance, which is measured by effective tax rate, does not significantly affect firm value. This implies that 1) the sample firms do not use tax avoidance as an instrument to increase their firm value and 2) the investors no longer value the tax avoidance activities as an alternative to increase firm value since it has some risks that potentially will be faced by the firm in the future if there is an investigation executed by taxation authority. The firms should perform the other value-added activities to increase their firm value rather than tax avoidance activities.