Long Run Corporate Tax Avoidance and Firm Value: Evidence from Indonesia

Gatot Soepriyanto

Abstract

This study examines the level to which corporate tax avoidance activity is valued by investors in a large sample of Indonesian firms. The risk minimization perspective of corporate tax avoidance suggest that such activities, especially aggressive tax strategies may diminish the firm values, as investors consider them as risky strategies. Under cash flow maximization perspective, however, corporate tax avoidance is considered as a value-enhancing activity as it may increase firm value through tax saving. Based on a sample consisting of 1,023 firm-year observations, made up of 244 unique firms over the period 2006-2015, I find that the tax avoidance strategies – proxied by long run GAAP effective tax rates and cash effective tax rates – are negatively associated with firm value, which lends credence to the risk minimization motive. My inferences still hold after controlling year and industry-fixed effect and a propensity score matching (PSM) test.

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Paper Citation


in Harvard Style

Soepriyanto G. (2018). Long Run Corporate Tax Avoidance and Firm Value: Evidence from Indonesia.In Proceedings of the Journal of Contemporary Accounting and Economics Symposium 2018 on Special Session for Indonesian Study - Volume 1: JCAE Symposium, ISBN 978-989-758-339-1, pages 705-713. DOI: 10.5220/0007020207050713


in Bibtex Style

@conference{jcae symposium18,
author={Gatot Soepriyanto},
title={Long Run Corporate Tax Avoidance and Firm Value: Evidence from Indonesia},
booktitle={Proceedings of the Journal of Contemporary Accounting and Economics Symposium 2018 on Special Session for Indonesian Study - Volume 1: JCAE Symposium,},
year={2018},
pages={705-713},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0007020207050713},
isbn={978-989-758-339-1},
}


in EndNote Style

TY - CONF

JO - Proceedings of the Journal of Contemporary Accounting and Economics Symposium 2018 on Special Session for Indonesian Study - Volume 1: JCAE Symposium,
TI - Long Run Corporate Tax Avoidance and Firm Value: Evidence from Indonesia
SN - 978-989-758-339-1
AU - Soepriyanto G.
PY - 2018
SP - 705
EP - 713
DO - 10.5220/0007020207050713