THE EFFECT OF EXECUTIVE CHARACTERISTICS, CEO OVERCONFIDENCE, CAPITAL INTENSITY ON TAX AVOIDANCE

Authors

  • Vinda Bivianti Economic Faculty, Universitas Katolik Darma Cendika, Surabaya, Indonesia
  • Melania Eugenia Stefani Economic Faculty, Universitas Katolik Darma Cendika, Surabaya, Indonesia
  • Nia Yuniarsih Economic Faculty, Universitas Katolik Darma Cendika, Surabaya, Indonesia

Abstract

This study examines the effect of executive characteristics, CEO overconfidence, capital intensity on tax avoidance. The independent variables of this study are executive characteristics, CEO overconfidence, capital intensity; the dependent variable is tax avoidance. Earnings measure executive characteristics before interest expense, taxes, depreciation, amortization divided by a total asset. CEO overconfidence is measured by combining these proxies: overinvestment (also known as an excess investment), the ratio of liabilities to equity, and dividend yield. If two of the three combinations of proxies are met, then the related company is given a value of one (1) and a value of zero (0) otherwise. The capital intensity is measured by a total fixed asset divided by a total asset. Tax avoidance is measured by cash effective tax rates (CETR). The population in this study is 310 primary consumption sector companies listed on the Indonesian Stock Exchange from 2016 to 2020. The sample was selected by purposive sampling method and finally obtained 175 primary consumption sector companies that fulfill the criteria. Data were analyzed using multiple regression analysis models. The result shows that executive characteristics and capital intensity positively influence tax avoidance. CEO overconfidence is negatively influencing tax avoidance.

 

References
Abiprayu, K. B. and Wiratama, B. 2016. Does CEO’s Hubris Affecting Dividends Payout? Jurnal Dinamika Manajemen 7(1): 66–75
Annisa. 2017. Pengaruh Return on Asset, Leverage, Ukuran Perusahaan dan Koneksi Politik Terhadap Penghindaran Pajak. JOM Fekon 4(1): 685–698
Ardillah, K. and Prasetyo, C. A. 2021. Executive Compensation, Executive Character, Audit Comitee, and Audit Quality on Tax Avoidance. Akuntabilitas: Jurnal Ilmu Akuntansi 14(2): 169-186
Artinasari, N. and Mildawati, T. 2018. Pengaruh Profitabilitas, Leverage, Likuiditas, Capital Intensity dan Inventory Intensity Terhadap Tax Avoidance. Jurnal Ilmu dan Riset Akuntansi 7(8): 1-18
Astuti, T. P. and Aryani, Y. A. 2016. Tren Penghindaran Pajak Perusahaan Manufaktur di Indonesia yang Terdaftar di BEI Tahun 2001-2014. Jurnal Akuntansi Untar 20(3): 375–388
Besley, T. and Persson, T. 2014. Why do developing countries tax so little? Journal of Economic Perspectives 28(4): 99–120.
Boone, J. P., Khurana, I. K., dan Raman, K. K., 2013, Religiosity and Tax Avoidance. Journal of American Taxation Association 35(1): 53–84
Budiman, J. and Setiyono. 2012. Pengaruh Karakter Eksekutif Terhadap Penghindaran Pajak (Tax Avoidance)
Butje, S. and Tjondro, E. 2014. Pengaruh Karakteristik Eksekutif dan Koneksi Politik Terhadap Tax Avoidance. Tax & Accounting Review 4(1): 1–9
Carolina, V., Natalia, M., dan Debbianita, D. 2014. “Karakter Eksekutif terhadap Tax Avoidance dengan Leverage sebagai Variabel Intervening”. Jurnal Keuangan dan Perbankan 18(3): 409-419.
Chyz, J. A., Gaertner, F. B., Kausar, A., and Watson, L. 2019. Overconfidence and Corporate Tax Policy. Review of Accounting Studies 24(3): 1114–1145
Cobham, A., Bernardo, J. G., Palanský, M., and Monsour, M. B. 2020. The State of Tax Justice 2020 : Tax Justice in the time of COVID-19. Tax Justice Network 1–83
Dharma, I. M. S. and Ardiana, P. A. 2016. Pengaruh Leverage, Intensitas Aset Tetap, Ukuran Perusahaan, dan Koneksi Politik Terhadap Tax Avoidance. E-Jurnal Akuntansi Universitas Udayana 15(1): 584–613
Dyreng, S. D., Hanlon, M., and Maydew, E. L. 2018. When Does Tax Avoidance Result In Tax Uncertainty? The Accounting Review 1–55
Fitria, G. N. 2018. Pengaruh Kepemilikan Institusional, Komisaris Independen, Karakter Eksekutif dan Size Terhadap Tax Avoidance. Jurnal Profita : Komunikasi Ilmiah Akuntansi dan Perpajakan 11(3): 438–451
Fitriany, L. C. 2016. Pengaruh Aset Pajak Tangguhan, Beban Pajak Tangguhan, dan Perencanaan Pajak Terhadap Manajemen Laba. JOM Fekon 3(1): 1150–1163
Gartika, R. and Wijaya, I. 2018. Pengaruh Karakteristik Perusahaan dan Karakter Eksekutif Terhadap Penghindaran Pajak. Jurnal Ekonomi 9(1): 70–79
Hanum, H. R. and Zulaikha. 2013. Pengaruh Karakteristik Corporate Governance Terhadap Effective Tax Rates. Diponegoro Journal of Accounting 2(2): 1-10
Hidhayana, N. and Suhardianto N. 2021. Pengaruh CEO Overconfidence Terhadap Penghindaran Pajak. SAR (Soedirman Accounting Review): Journal of Accounting and Business 6(1): 50-62
Hirshleifer, D., Low, A., and Teoh, S. H. 2012. Are Overconfident CEOs Better Innovators? Journal of Finance 67(4): 1457–1498
Hribar, P. and Yang, H. I. 2016. CEO Overconfidence and Management Forecasting. Research Collection School Of Accountancy 33(1): 204–227
Hsieh, T. S., Wang, Z., and Demirkan, S. 2018 Overconfidence and Tax Avoidance: The Role of CEO and CFO Interaction. Journal of Accounting and Public Policy 37(3): 241–253
Jessica and Toly, A. A. 2014. Pengaruh Pengungkapan Corporate Social Responsibility Terhadap Agresivitas Pajak. Tax & Accounting Review 4(1): 1-16
Kang, S. A. and Cho, S. M. 2020. Management Overconfidence and CSR Activities in Korea with a Big Data Approach. Sustainability 12(11): 4406.
Kouaib, A. and Jarboui, A. 2016. The Moderating Effect of CEO Profile on The Link Between Cutting R & D Expenditures and Targeting to Meet / Beat Earnings Benchmarks. Journal of High Technology Management Research 27(2): 140–160
Kurniasih, T. and Sari, M. R. 2013. Pengaruh Return on Assets, Leverage, Corporate Governance, Ukuran Perusahaan dan Kompensasi Rugi Fiskal Pada Tax Avoidance. Buletin Studi Ekonomi 18(1): 58–66.
Libby, R. and Rennekamp, K. 2010. Self-Serving Attribution Bias, Overconfidence and the Issuance of Management Forecasts. The Journal of Accounting Research, Forthcoming 1–52.
Low, A. 2009. Managerial Risk-Taking Behavior and Equity-Based Compensation. Journal of Financial Economics 92(3): 470-490.
Malmendier, U. and Tate, G. 2005. CEO Overconfidence and Corporate Investment. The Journal of Finance 60(6): 2661–2700.
Munawaroh, M. A. and Ramdany. 2019. Peran CSR, Ukuran Perusahaan, Karakter Ek
sekutif dan Koneksi Politik Terhadap Potensi Tax Avoidance. Jurnal Akuntansi 8(2): 109–121
Muzakki, M. R. and Darsono. 2015. Pengaruh Corporate Social Responsibility dan Capital Intensity Terhadap Penghindaran Pajak. Diponegoro Journal of Accounting 4(3): 1-8.
Olsen, K. J. and Stekelberg, J. 2015. CEO Narcissism and Corporate Tax Sheltering. Journal of the American Taxation Association 38(1): 1–22.
Peterson, R. S., Smith, D. B., Martorana, P. V., and Owens, P. D. 2003. The Impact of Chief Executive Officer Personality on Top Management Team Dynamics: One Mechanism by Which Leadership Affects Organizational Performance. Journal of Applied Psychology 88(5): 795–808.
Pohan, C. A. 2013. Manajemen Perpajakan: Strategi Perencanaan Pajak & Bisnis (Edisi Revisi). PT Gramedia Pustaka Utama. Jakarta.
Prastiwi, D. and Ratnasari, R. 2019. The Influence of Thin Capitalization and The Executives’ Characteristics Toward Tax Avoidance by Manufacturers Registered on ISE in 2011-2015. AKRUAL: Jurnal Akuntansi 10(2): 119–134.
Prawati, L. D. and Hutagalung, J. P. U. 2020. The Effect of Capital Intensity, Executive Characteristics, and Sales Growth on Tax Avoidance. Journal of Applied Finance & Accounting 7(1): 1–8.
Putri, C. L. and Lautania, M. F. 2016. Pengaruh Capital Intensity Ratio, Invetory Intensity Ratio, Ownership Structure, dan Profitability Terhadap Effective Tax Rate (ETR). Jurnal Ilmiah Mahasiswa Ekonomi Akuntansi 1(1): 101-119.
Richardson, G. and Lanis, R. 2007. Determinants of The Variability in Corporate Effective Tax Rates and Tax Reform: Evidence from Australia. Journal of Accounting and Public Policity 26(6): 689-704.
Rihab, B. A. and Jedidia, L. Ben. 2016. Managerial Overconfidence and Debt Decisions, Journal of Modern Accounting and Auditing 12(4): 225–241.
Skala, D. 2008. Overconfidence in Psychology and Finance – an Interdisciplinary Literature Review. The bank I Kredyt 4: 33-50.
Suandy, E. 2008. Perencanaan Pajak. 4th Ed. Penerbit Salemba Empat. Jakarta.
Sumunar, K. I., Jannah, L., and Aulia, D., 2019. CEO Overconfidence, Tax Avoidance, and Education Foundation. Jurnal Akuntansi dan Auditing Indonesia 23(2).
Supriyanti, E. and Aqida, U. 2020. Karakteristik Eksekutif, Intensitas Modal & Tax Avoidance. Jurnal Akuntansi Indonesia 9(1): 11-18.
Surachman, A. E. 2017. Influence of Executive Characteristics and Duality of Chief Executive Officer to Tax Avoidance. International Journal of Science and Research 6(10): 1671–1677.
Sutrisno, P. and Pirzada, K. 2020. Are CEO Overconfidence and Audit Firm Size Related To Tax Avoidance? GATR Accounting and Finance Review 5(2): 56–65.
Utari, N. K. Y. and Supadmi, N. L. 2017. Pengaruh Corporate Governance, Profitabilitas dan Koneksi Politik Pada Tax Avoidance. E-Jurnal Akuntansi Universitas Udayana 18(3): 2202–2230.
Widiiswa, R. A. N. and Baskoro. R. 2020. Good Corporate Governance dan Tax Avoidance pada Perusahaan Multinasional dalam Moderasi Peningkatan Tax Audit Coverage Ratio. Jurnal Kajian Ilmiah Perpajakan Indonesia 2(1): 57–75.
Zhang, Y. and Yang, Z. 2018. Research on the Relationship between CEO’s Overconfidence and Corporate Investment Financing Behavior. Journal of Modeling and Optimization 10(1): 8–14.

 

Downloads

Published

2022-04-06

How to Cite

Bivianti, V. ., Stefani, M. E. ., & Yuniarsih, N. . (2022). THE EFFECT OF EXECUTIVE CHARACTERISTICS, CEO OVERCONFIDENCE, CAPITAL INTENSITY ON TAX AVOIDANCE. International Conference of Business and Social Sciences, 2(1), 895–906. Retrieved from https://ojsicobuss.stiesia.ac.id/index.php/icobuss1st/article/view/257