Board of Directors’ Ethnicity and Tax Avoidance

Yolanda Anggraeny, Gatot Soepriyanto

Abstract

This research examines the relationship between the ethnic diversity of the board of directors and corporate tax-avoidance behavior using a quantitative approach. This research examined 126 companies listed on the Indonesia Stock Exchange during the 2017–2021 observation years. The Blau index measures the ethnic diversity of the board of directors. In contrast, corporate tax avoidance is measured by cash-effective tax rate, book-tax difference, and effective tax rate proxies. The documents used in collecting ethnic diversity data include the company’s annual report, director’s curriculum vitae, video recordings, audio recordings, photo recordings, and writing recordings. The research was conducted using the STATA application. The results showed that the interaction of ethnically diverse boards of directors did not influence tax-avoidance behavior. However, the research found a significant link between ethnicity and tax avoidance when boards of directors did not interact with each other. This finding provides new knowledge and insight into the field of taxation for regulators investigating cases of tax-avoidance developments.

 

Keywords: tax avoidance, ethnicity, board of directors.

 

DOI: https://doi.org/10.55463/hkjss.issn.1021-3619.61.66


Full Text:

PDF


References


ALSHABIBI, B., PRIA, S., & HUSSAINEY, K. (2022). Nationality Diversity in Corporate Boards and Tax Avoidance: Evidence from Oman. Administrative Sciences, 12(3), 111. https://doi.org/10.3390/admsci12030111

ANJANI, F.T. (2019). Pengaruh Diversitas Dewan Komisaris dan Overconfidence Terhadap Tax Avoidance (Survei Pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Tahun 2013-2016). Akuntansi Dan Bisnis, 12(9), 1689–1699.

ATHIRA, A., & RAMESH, V.K. (2023). COVID-19 and corporate tax avoidance: International evidence. International Business Review, 32(4), 102143. https://doi.org/10.1016/j.ibusrev.2023.102143

CABELLO, O.G., GAIO, L.E., & WATRIN, C. (2019). Tax avoidance in management-owned firms: evidence from Brazil. International Journal of Managerial Finance, 15(4), 580–592. https://doi.org/10.1108/IJMF-04-2018-0117

CHRISTENSEN, D., DHALIWAL, D.S., BOIVIE, S., & GRAFFIN, S.D. (2012). Managers’ Personal Political Orientation and Corporate Tax Avoidance. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1977638

FATHURROJA, A., MUMTAZAH, H., ROSIANA, R., PUDOLI, S.B.M., & FRIDAYANTI, F. (2018). Gambaran Identitas Etnis Remaja Suku Jawa dan Sunda. Jurnal Psikologi Islam dan Budaya, 1(2), 107–112. https://doi.org/10.15575/jpib.v1i2.3412

HERNÁNDEZ-NICOLÁS, C.M., MARTÍN-UGEDO, J.F., & MÍNGUEZ-VERA, A. (2019). The effect of gender diversity on the board of Spanish agricultural cooperatives on returns and debt: An empirical analysis. Agribusiness, 35(4), 639–656. https://doi.org/10.1002/agr.21608

JARBOUI, A., KACHOURI BEN SAAD, M., & RIGUEN, R. (2020). Tax avoidance: Do board gender diversity and sustainability performance make a difference? Journal of Financial Crime, 27(4), 1389–1408. https://doi.org/10.1108/JFC-09-2019-0122

JENSEN, M.C., & MECKLING, W.H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305-360. https://doi.org/10.1016/0304-405X(76)90026-X

KARTADJUMENA, E., & MUNTAZHAR, M.M. (2021). Do the Executive Characters and Leverage Can Affect Tax Avoidance?: Evidence from Indonesia Mining and Coal Listed Companies. Turkish Journal of Computer and Mathematics Education, 12(11), 1418–1425. Retrieved from https://9lib.net/document/rz3k1l7q-executive-characters-leverage-avoidance-evidence-indonesia-mining-companies.html

KAULU, B. (2022). Determinants of Tax Evasion Intention using the Theory of Planned Behavior and the Mediation Role of Taxpayer Egoism. Fudan Journal of the Humanities and Social Sciences, 15(1), 63–87. https://doi.org/10.1007/s40647-021-00332-8

KHURANA, I.K., & MOSER, W.J. (2013). Institutional Shareholders’ Investment Horizons and Tax Avoidance. Journal of the American Taxation Association, 35, 111-134. https://doi.org/10.2308/atax-50315

LEE, Y., NG, S., SHEVLIN, T., & VENKAT, A. (2021). The effects of tax avoidance news on employee perceptions of managers and firms: Evidence from Glassdoor.com ratings. The Accounting Review, 96(3), 343–372. https://doi.org/10.2308/TAR-2019-0148

LESTARI, N., & WARDHANI, R. (2015). The Effect of the Tax Planning to Firm Value with Moderating Board Diversity. International Journal of Economics and Financial Issues, 5(1S), 315–323. Retrieved from https://econjournals.com/index.php/ijefi/article/view/1396

MAJEED, M.A., & YAN, C. (2019). Financial statement comparability and corporate tax avoidance: evidence from China. Economic Research-Ekonomska Istrazivanja, 32(1), 1813–1843. https://doi.org/10.1080/1331677X.2019.1640627

OBIORA, F.C., ONUORA, J.K., & MAYAH, E. (2022). Board Multiplicity and Corporate Tax Avoidance Behaviour of Quoted Healthcare Manufacturing Firms in Nigeria. Journal of Accounting and Financial Management, 8(1), 2504–8856. Retrieved from https://www.iiardjournals.org/abstract.php?j=JAFM&pn=Board%20Multiplicity%20and%20Corporate%20Tax%20Avoidance%20Behaviour%20ofQuoted%20Healthcare%20Manufacturing%20Firms%20in%20Nigeria&id=2802

PANGARIBUAN, H., FERNANDO HB, J., AGOES, S., SIHOMBING, J., & SUNARSI, D. (2021). The Financial Perspective Study on Tax Avoidance. Budapest International Research and Critics Institute-Journal (BIRCI-Journal), 4(3), 4998–5009. https://doi.org/10.33258/birci.v4i3.2287

RHEE, C.S., WOO, S., & KIM, D.H. (2020). The effect of female employment on corporate sustainability in terms of tax avoidance. Sustainability, 12(1), 140. https://doi.org/10.3390/su12010140

RUSHTON, J.P. (2008). Testing the genetic hypothesis of group mean IQ differences in South Africa: Racial admixture and cross-situational consistency. Personality and Individual Differences, 44, 768−776. http://dx.doi.org/10.1016/j.paid.2007.10.011

SHI, A.A., CONCEPCION, F.R., LAGUINDAY, C.M.R., ONG HIAN HUY, T.A.T., & UNITE, A.A. (2020). An analysis of the effects of foreign ownership on the level of tax avoidance across Philippine publicly listed firms. DLSU Business and Economics Review, 30(1), 1–14. Retrieved from https://www.dlsu.edu.ph/wp-content/uploads/2020/08/1SHI-new.pdf

SOEPRIYANTO, G. (2018). Long Run Corporate Tax Avoidance and Firm Value: Evidence from Indonesia. Proceedings of the Journal of Contemporary Accounting and Economics Symposium 2018 on Special Session for Indonesian Study (JCAE 2018) - Contemporary Accounting Studies in Indonesia, pp. 267–275.

SUHARYO, S. (2013). Pola Nama Masyarakat Keturunan Tionghoa. HUMANIKA, 18(2). https://doi.org/10.14710/humanika.18.2

SUTRISNO, P., UTAMA, S., HERMAWAN, A.A., & FATIMA, E. (2023). Founder or descendant CEOs, tax avoidance and firms’ future risks: the Indonesian evidence. Journal of Family Business Management. https://doi.org/10.1108/jfbm-10-2022-0122

SYAUQANI, S. (2019). Pengaruh Perbedaan Agama dan Etnis Masyarakat dalam Pelaksanaan Pekerjaan Sosial. Dinamika Penelitian: Media Komunikasi Penelitian Sosial Keagamaan, 19(1), 25–46. https://doi.org/10.21274/dinamika.2019.19.1.25-46

WEN, W., CUI, H., & KE, Y. (2020). Directors with foreign experience and corporate tax avoidance. Journal of Corporate Finance, 62, 101624. https://doi.org/10.1016/j.jcorpfin.2020.101624


Refbacks

  • There are currently no refbacks.