Suwa di, Eko; Sholihin, Mah ud; A i a, Choi unnisa; Sa agih, A ah Habib
A icle
The mode a ing ole o co po a e ax isks on he ma ke
alua ion o ax sa ings: a new empi ical e idence in he
Indonesian con ex
Cogen Business & Managemen
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The mode a ing ole o co po a e ax isks on he
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Eko Suwa di, Mah ud Sholihin, Choi unnisa A i a & A ah Habib Sa agih
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(2024) The mode a ing ole o co po a e ax isks on he ma ke alua ion o ax sa ings: a new
empi ical e idence in he Indonesian con ex , Cogen Business & Managemen , 11:1, 2389254,
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The mode a ing ole o co po a e ax isks on he ma ke alua ion
o ax sa ings: a new empi ical e idence in he Indonesian con ex
Eko Suwa dia , Mah ud Sholihina , Choi unnisa A i aa and A ah Habib Sa agihb
aDepa men o accoun ing, Facul y o economics and Business, uni e si as gadjah Mada, Yogyaka a, indonesia;
bDepa men o Fiscal adminis a ion, Facul y o adminis a i e sciences, uni e si as indonesia, Jawa Ba a , indonesia
ABSTRACT
The p ima y aim o his s udy is o examine he mode a ing e ec o co po a e ax isks
on he ela ionship be ween ax sa ings and i m alue. A quan i a i e app oach is
u ilized in his s udy. A o al o 1813 i m-yea obse a ions om companies lis ed on
he Indonesia S ock Exchange (IDX) om 2012 o 2017 comp ise he sample. This s udy
concludes ha he e is no mode a ing e ec o ax isks on he ela ionship be ween
ax sa ings and company alue. This s udy emphasizes he impo ance o e ec i e ax
isk managemen o co po a ions in o de o p e en in es o s om dec easing hei
e alua ion o he o ganiza ion’s ax-sa ing endea o s. Fu he discussion will ollow
ega ding he an icipa ed p ac ical implica ions o his s udy o in es o s, ax au ho i ies,
and company managemen .
1. In oduc ion
Ini ially, i is widely acknowledged ha he phenomenon pe aining o co po a e ax beha io is a wo ld-
wide occu ence, mani es ing i sel in nume ous na ions (Jones & Temou i, 2016), encompassing bo h
de eloping and de eloped coun ies (Kanaga e nam e al., 2016). Tax a oidance p ac ices possess he
capaci y o p esen subs an ial haza ds o nume ous co po a ions (S iglingh e al., 2020) as well as o he
in e es ed pa ies (see Sa agih & Ali, 2023a). Consequen ly, aspec s o co po a e axa ion a e g owing in
signi icance and a e becoming an inc easing conce n o in es o s and o he s akeholde s (D ake
e al., 2019).
Companies’ ax-sa ing endea o s may yield ad an ages in he o m o ax sa ings, bu hey may also
en ail disad an ages in he o m o ax isks (see Gallemo e & Lab o, 2015; Hamil on & S ekelbe g, 2017;
Sa agih & Ali, 2023b) which may a ec he company’s o e all alue (D ake e al., 2019; Gued ib &
Ma ouani, 2023). Tax isks a e one impo an ca ego y o isks ha co po a ions encoun e alongside an
ex ensi e a ay o o he isk ca ego ies (Sa agih & Ali, 2023a). Tax isks can esul in a mul i ude o sub-
s an ial ami ica ions (see Sa agih & Ali, 2023a). The a o emen ioned ami ica ions may encompass he
deb and s ock ma ke s, he capi al s uc u e, he isk and in es men o he company, he ax s a egy
and ou comes, cash managemen , accoun ing, audi ing, and execu i e compensa ion plans (see Sa agih
& Ali, 2023a). Fu he mo e, hey may impac he ma ke alue o he company (Sa agih & Ali, 2023a).
P e ious esea ch on he ela ionship be ween hese h ee cons uc s ( ax sa ings, ax isks, and i m
alue) has been ai ly limi ed ( o a su ey o he li e a u e, see Sa agih & Ali, 2023a). Two p e ious s ud-
ies ha e shown ha ax isk is in e sely associa ed wi h i m alue (D ake e al., 2019; Gued ib & Ma ouani,
2023). Fu he mo e, hei s udy ound ha ax isks unde mine he a o able ela ionship be ween ax
© 2024 he au ho (s). Published by in o ma uK Limi ed, ading as aylo & F ancis g oup
CONTACT eko suwa di e.suwa [email p o ec ed] Depa men o accoun ing, Facul y o economics and Business, uni e si as gadjah Mada,
Yogyaka a, indonesia.
h ps://doi.o g/10.1080/23311975.2024.2389254
his is an open access a icle dis ibu ed unde he e ms o he C ea i e Commons a ibu ion License (h p://c ea i ecommons.o g/licenses/by/4.0/), which
pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed. he e ms on which his a icle has been
published allow he pos ing o he accep ed Manusc ip in a eposi o y by he au ho (s) o wi h hei consen .
ARTICLE HISTORY
Recei ed 28 No embe
2023
Re ised 12 July 2024
Accep ed 1 Augus 2024
KEYWORDS
Tax sa ings; ax isks; i m
alue
SUBJECTS
Accoun ing; Business,
Managemen and
Accoun ing; Co po a e
Finance; Financial
Accoun ing
ACCouNTING, CoRPoRATE Go ERNANCE & BuSINESS ETHICS |
RESEARCH ARTICLE
2 E. SuWARDI ETAL.
sa ings and i m alue (D ake e al., 2019; Gued ib & Ma ouani, 2023). In o he wo ds, i ax isks a e
gene ally minimal, he ma ke will eac a o ably o ax sa ings (D ake e al., 2019). Tax isks a e signi -
ican ac o s in in es o s’ assessmen o ax sa ings. In o de o enhance ou comp ehension o he phe-
nomenon a hand, i is bene icial o examine he mode a ing e ec o ax isks on he ela ionship
be ween ax sa ings and i m alue ac oss a ious coun y con ex s and esea ch pe iods, gi en he
signi icance o his cons uc . Acco dingly, he empi ical documen a ions by D ake e al. (2019) and
Gued ib and Ma ouani (2023) mo i a es us o conduc his s udy. Speci ically, we a e mo i a ed o in es-
iga e whe he such an in e ac ion exis s in Indonesia.
Acco dingly, he p ima y inqui y o his s udy is whe he co po a e ax isks (he ea e ax isks) mod-
e a e he ela ionship be ween co po a e alue and ax sa ings in he Indonesian con ex . Re es ing is
s ill necessa y (Block & Kucke z, 2018) o he con ex o o he de eloping coun ies like Indonesia,
despi e he ac ha p e ious s udies ha e documen ed his in de eloped coun ies ( he uni ed S a es)
by D ake e al. (2019) and in de eloping coun y (Tunisia) by Gued ib and Ma ouani (2023). In addi ion,
he e a e no many s udies on ax isks in Indonesia, despi e he ac ha his concep is becoming mo e
and mo e signi ican o de eloping coun ies (see Sa agih & Ali, 2023a; 2023b; Suwa di & Sa agih, 2023).
Indonesia is one o he la ges de eloping coun ies in he globe, acco ding o publicly a ailable da a
om he globe Bank, In e na ional Mone a y Fund, and The G oup o Twen y (G20). Addi ionally, he
coun y is a majo playe in in e na ional comme ce. Fu he mo e, Indonesia assumes a signi ican posi-
ion on he global ax discou se agenda by means o he G20 o um (The G oup o Twen y, 2023). Tax
egula ions and o e sigh in Indonesia ha e become mo e s ingen o e he pas decade (see Sa agih
e al., 2023; Se yowa i e al., 2020; 2023). In con as o he uni ed S a es, whe e his equi emen al eady
applies o he disclosu e o un ecognized ax bene i s, p esen ly egula o s in Indonesia do no manda e
annual epo s o companies lis ed on he IDX o disclose ax isks ye . This complica es he capabili y o
inancial epo consume s o o ecas he po en ial ax isks ha a company may ace.
This s udy is c i ical and ime-sensi i e o conduc due o i s conside a ion o mul iple ac o s ha
compel us o in es iga e i . Fu he mo e, he e is a lack o consensus among he esul s o nume ous
p io in es iga ions conce ning he associa ion be ween ax sa ings ac i i ies and he alue o a com-
pany (Lee & Paek, 2019; Xu e al., 2020). To en ich insigh s in o he ela ionship o ax sa ings and i m
alue, and o examine u he beyond he ela ionship be ween hose cons uc s by examining on how
ax isk can b ing complex ami ica ions which migh al e co po a e s a egies, and hence a ec co po-
a e alue. Mo eo e , esea ch on he opic o ax isks, including hei mode a ing unc ion, is s ill com-
pa a i ely sca ce, bo h in de eloped and de eloping coun ies (see Sa agih & Ali, 2023a). In addi ion,
eme ging ma ke s a e unique se ings cha ac e ized by se e al aspec s (uya e al., 2024). Consequen ly,
he e ec o ax isks as a mode a o be ween ax sa ings and i m alue by using Indonesian con ex
is he subjec o his s udy.
An in iguing s udy se ing can be c ea ed by aking his con ex in o accoun and ee alua ing he
ela ionship be ween he h ee cons uc s in he Indonesian con ex . Re es ing, as de ined by Block and
Kucke z (2018) as eplica ion s udies, con inues o be an essen ial componen in acili a ing he mean-
ing ul ad ancemen o scien i ic disciplines and b idging he di ide be ween heo y and p ac ice (Block
& Kucke z, 2018). Re es ing ( eplica ion) can be a aluable me hod o expanding one’s unde s anding
o speci ic phenomena (Block e al., 2022). This will ul ima ely con ibu e o he es ablishmen o a solid
ounda ion o academic discou se, as i is subs an ia ed by an abundance o empi ical e idence (Block
& Kucke z, 2018).
As p e iously men ioned, his s udy s i es o examine he join e ec o ax isks on he ela ionship
be ween ax sa ings and i m alue. To a ain his objec i e, his s udy u ilized samples comp ising 1813
i m-yea s om co po a ions lis ed on IDX du ing he pe iod om 2012 o 2017. The indings o he
eg ession analysis indica e ha he e is no mode a ing e ec o ax isks on he ela ionship be ween
ax sa ings and i m alue. In o he wo ds, in es o e alua ion is no signi ican ly impac ed by he com-
bined impac o ax isk and ax sa ings. The esul s p esen ed he e a e in opposi ion o he conclusions
d awn in he uni ed S a es (D ake e al., 2019) and in Tunisia (Gued ib & Ma ouani, 2023), may be due
o di e en ax egime be ween bo h coun ies and Indonesia.
This s udy has bo h li e a u e and p ac ical con ibu ions. By p o iding empi ical e idence o he ela-
ionship be ween he h ee, he indings o his s udy con ibu e o h ee bodies o li e a u e
CoGENT BuSINESS & MANAGEMENT 3
simul aneously: he li e a u e on ax isks, ax sa ings, and i m ma ke alua ion. The con ex o a de el-
oped coun y (uni ed S a es) and a de eloping coun y (Tunisia) has been used in p io s udies o exam-
ine he ela ionship be ween hese h ee cons uc s. This wo k complemen s he wo p e ious s udies by
p o iding di e en empi ical e idence ( ax isks do no mode a e he ela ionship be ween ax sa ings
and i m alue in Indonesia). In e ms o i s p ac ical con ibu ion o company managemen , his s udy
is expec ed o o e empi ical indings ha highligh he impo ance o e ec i e ax isk managemen
s a egies in businesses. Fo in es o s, hey should ake his in o conside a ion when making in es men
decisions. Finally, he p ac ical implica ions o his s udy a e expec ed o be signi ican o ax au ho i ies
and egula o s. I is impo an o p esen assu ance ega ding ax egula ions, ax laws, and sui able ax
audi s. As i is known, he sou ces o ax isks aced by i ms can come om hei ex e nal en i onmen
such as ax au ho i ies and egula o s. I is also c i ical o de elop and implemen egula ions equi ing
annual epo s om co po a ions o con ain a leas minimal in o ma ion ega ding ax isks o sa egua d
he in e es s o he b oade communi y gene ally and he igh s o in es o s speci ically.
The es o his a icle is o ganized as ollows. The second sec ion ou lines he li e a u e e iew and
hypo hesis de elopmen . The hi d sec ion desc ibes he esea ch me hod. The ou h sec ion p esen s
he empi ical indings. This sec ion also con ains discussion and implica ions. The i h sec ion p esen s
he esul s o he obus ness es s. Las ly, he inal sec ion con ains conclusions, limi a ions, and sugges-
ions o u u e esea ch.
2. Li e a u e e iew and hypo hesis de elopmen
2.1. Classical inance heo y
Following D ake e al. (2019), his s udy uses classical inance heo y o p edic he mode a ing ole o
ax isks on he associa ion be ween ax a oidance and i m ma ke alue. In gene al, classical inancial
heo y p edic s and explains ha in es o s will beha e wi h a ional expec a ions o sus ain an e icien
ma ke (see Bake & Wu gle , 2006; By ne & B ooks, 2008). This heo y sugges s ha in e icien ma ke s,
a ional in es o s own di e si ied po olios and secu i y p ices ep esen he discoun ed alue o expec ed
cash lows (see Bake & Wu gle , 2006; By ne & B ooks, 2008). The u u e cash lows can hen depend on
sys ema ic isk (By ne & B ooks, 2008). In ela ion o his, classical inance heo y iews isk as he dis-
pe sion o po en ial ou comes om an in es men (D ake e al., 2019). Acco dingly, in pa icula , aming
ax isks as he dispe sion o po en ial ou comes om an in es men is consis en wi h classical inance
heo y (D ake e al., 2019).
2.2. Tax sa ings, ax isks, and i m ma ke alue
The implemen a ion o ax managemen s a egies by co po a ions can gene a e ax isks in addi ion o
po en ial ax sa ings (Sa agih & Ali, 2023a). In o he wo ds, a company’s ax s a egy can esul in ax
ou comes in he o m o ax sa ings (bene i s) and ax isks (cos s). In acco dance wi h Hanlon and
Hei zman (2010), ax sa ings a e he educ ion o explici axa ion. Tax isks can be de ined as he deg ee
o a iabili y in he p ospec i e e u ns o an in es men , hus indica ing he deg ee o isk associa ed
wi h ax sa ings (Hamil on & S ekelbe g, 2017). Nume ous s akeholde s, including in es o s, place impo -
ance on bo h ax sa ings and ax isks (D ake e al., 2019).
The e ec o ax sa ings on i m alue has been he subjec o a conside able numbe o p io s udies,
he indings o which ha e been gene ally inconsis en (Lee & Paek, 2019; Xu e al., 2020). Tax sa ings
was disco e ed o ha e no e ec on i m alue in ea ly s udies (Desai & Dha mapala, 2009). Con a y o
his, se e al s udies ha e ound a posi i e co ela ion be ween ax-sa ing ac i i ies and i m alue (D ake
e al., 2019; Gued ib & Ma ouani, 2023; Li e al., 2017). This may occu , in pa , because he ac i i y is
ega ded as one ha p o ides addi ional alue o he business o ganiza ion. Chen e al. (2014) on he
o he hand, disco e ed ha ax sa ings inc eases agency cos s and dec eases i m alue in China.
P e ious s udies ha e also documen ed a ious cons uc s, such as i m go e nance (Desai &
Dha mapala, 2009), inancial epo ing compa abili y (Lee & Paek, 2019), in es o p o ec ion (Lee & Choi,
2022), o ganiza ional capi al (Hasan e al., 2021), ha ac as mode a o s be ween i m alue and ax
4 E. SuWARDI ETAL.
sa ings. Acco ding o Xu e al. (2020), egula o y adjus men s in Taiwan led o a mo e p onounced neg-
a i e ela ionship be ween ax agg essi eness and i m alue. He on and Naha a (2020), on he o he
hand, disco e ha he ela ionship be ween ax sa ings and i m alue o mul ina ional co po a ions
ope a ing in he uni ed S a es is less nega i e.
Two mo e ecen s udies ha e begun o inco po a e he concep o ax isk as a mode a o ha
educes he e ec o ax a oidance on i m alue. Fo s a e , D ake e al. (2019) limi ed hei s udy o a
sample o indus ialized coun ies in he uni ed S a es om 1992 o 2014. Acco ding o he indings o
a s udy conduc ed by D ake e al. (2019), in es o s alue ax a oidance bu alue ax isks nega i ely.
Fu he mo e, hey es ablish ha ax isks mode a e he posi i e ela ionship be ween ax a oidance and
i m alue, which in luence in es o e alua ion owa ds i m alue. In o he wo ds, when ax a oidance
in ol es less isk, in es o s’ assessmen s o i a e mo e a o able (D ake e al., 2019).
Second, Gued ib and Ma ouani (2023) s udy concen a es on a sample o he de eloping coun y o
Tunisia wi h a compa a i ely ex ended pe iod o esea ch (2008–2020), bu wi h a e y small numbe o
obse a ions (290 i m-yea s). Consis en indings we e disco e ed, as men ioned ea lie by D ake e al.
(2019). Howe e , he e a e limi a ions o he s udy by Gued ib and Ma ouani (2023). The o e all applica-
bili y o he indings o o he de eloping coun ies is cons ained, pa icula ly in he case o Indonesia,
which is conside ably la ge han he sample size.
2.3. Hypo hesis de elopmen 1
Di e se ace s o co po a e axa ion ha e ex ensi e ami ica ions, impac ing no only he co po a ions
bu also a mul i ude o cons i uen s. The agg ega e isk o a business may be subs an ially impac ed by
ax isks. In es o s cons i u e a signi ican s akeholde g oup in ma e s pe aining o co po a e axa ion.
Tax isk and ax sa ings mus he e o e be aken in o accoun when analyzing he impac o ax sa ings
on company alue (D ake e al., 2019; Gued ib & Ma ouani, 2023; Sa agih & Ali, 2023a; 2023b; 2023c).
Tax-sa ing endea o s ha comply wi h ax laws and egula ions should be ega ded as law ul pu sui s
ha p o ide alue o he o ganiza ion. The company’s pe o mance in e ec i ely and e icien ly admin-
is e ing i s esou ces is e lec ed in i s capaci y o educe i s ax liabili y by a subs an ial amoun . The
ax-sa ing measu es possess signi ican po en ial o gene a e a o able pe cep ions among in es o s and
cap u e hei in e es .
Howe e , i is c ucial o unde sco e ha he e a e di e en deg ees o isk associa ed wi h ax a oid-
ance ha co po a ions can engage in D ake e al. (2019). A dec ease in in es o s’ e alua ion o ax-sa ing
ac i i ies is obse ed as ax isks inc ease. This may occu as in es o s ind i p og essi ely mo e chal-
lenging o o ecas he subs an ial deg ee o unp edic abili y su ounding u u e ax sa ings (D ake e al.,
2019). Consequen ly, he educ ion in he le el o isk associa ed wi h ax a oidance will lead o a mo e
a o able pe cep ion o ax a oidance among in es o s (D ake e al., 2019). In o he wo ds, i is an ici-
pa ed ha ax isk will mode a e he ela ionship be ween ax sa ings and i m alue. The e o e, he
hypo hesis is o mally a icula ed as ollows.
H1 Tax isks mode a e he ela ionship be ween ax sa ings and i m alue
3. Resea ch me hod
3.1. Da a sou ces and sample2
A quan i a i e app oach was employed in his s udy. This s udy used an indi ec da a acquisi ion me hod,
speci ically u ilizing company a chi e da a in he o m o inancial epo s and annual epo s. The
esea ch da a used in his s udy was sou ced om a syn hesis o in o ma ion om i ms’ annual epo s
as well as he osi is and Thomson Reu e s da abases. This pape employed hese da abases o collec
he da a, which is widely used da abases in he ield o esea ch.
The scien i ic coho comp ised publicly aded companies on he Indonesian S ock Exchange (IDX).
The e a e wo main easons why o use da a om Indonesia. Fi s , based on in o ma ion om he Wo ld
Bank open Da a, Indonesia is cu en ly in he op 20 o he wo ld’s economic g ow h. Second, acco ding
CoGENT BuSINESS & MANAGEMENT 5
o publicly a ailable da a eleased by he Tax Jus ice Ne wo k in 2020, mos eme ging coun ies, includ-
ing Indonesia, ha e a ela i ely high ax e enue loss. Thus, he Indonesian con ex se es o an in igu-
ing s udy se ing.
This s udy spanned a du a ion o six yea s, speci ically om 2012 o 2017. This pe iod was chosen
because he e a e no signi ican changes in ax egula ions in Indonesia. In o he wo ds, he ela ed
si ua ion o con ex ends o be homogeneous in such pe iods. In o de o e ec i ely accomplish he
esea ch objec i es, pu posi e sampling was employed in his s udy. In o de o be included in he
esea ch sample, companies mus ha e main ained consis en submission o comple e inancial epo s
and annual epo s o a pe iod o six consecu i e yea s, spanning om 2012 o 2017. A o al o 2094
i m-yea s we e acqui ed based on his c i e ion. Addi ionally, i ms ha possessed esea ch da a ha was
insu icien we e excluded om he sample. The c i e ia we e u ilized o iden i y app oxima ely 281
i m-yea s. As a esul , 1813 i m-yea s comp ised he ul ima e coun o obse a ions o his s udy, as
explained in Table 1.
3.2. Model speci ica ion and a iable de ini ions
A model was cons uc ed o examine he in e ac ion e ec be ween ax sa ings and ax isks, as his was
he only aspec o his s udy ha ocused on his ela ionship.3 This esea ch model was buil adap ing
he me hod used by Bea y and Ha is (1999), Cadman e al. (2010), Binz e al. (2023), Sa agih (2024), and
Sa agih e al. (2024).
CVAL CTS CTR CTRxCTS AGE BIG CC
i i i i i i
=++ + + ++
ββ β β β β β
01 2 3 4 5 6
EE DER EPS ROA SIZE
i i i i i i
+ ++ + +
β ββ β ε
7 8 9 10
C AL is company ma ke alue, which was p oxied by he ma ke - o-book a io. This p oxy has been
widely used o p edic i m ma ke alue (see Ma iani e al., 2023; olbe , 2024). This is consis en wi h
p io s udies by Chang e al. (2013), Kolsi and A ayah (2018), Po e i e al. (2018), Ben Fa ma and
Chouaibi (2023), and Bane jee e al. (2024). To ob ain C AL, ma ke alue o equi y is scaled by he book
alue o equi y (Ha is, 2024; Richa dson e al., 2024). When ma ke alue exceeds book alue, i signi ies
he possibili y o he company and i s sha eholde s o ea n good p o i s o enhanced alue (Ben Fa ma
& Chouaibi, 2023; Kolsi & A ayah, 2018).
CTS is co po a e ax sa ings. This s udy measu es ax sa ings ( ax a oidance) using book- ax di e -
ences (BTD), which is consis en wi h ea lie s udies (Akba i e al., 2019; Sa agih & Ali, 2022; 2023c; Sun
e al., 2023). Nex , CTR is co po a e ax isks. Consis en wi h Sa agih and Ali (2022) and Sa agih and Ali
(2023c), BTD ola ili y scaled by o al asse s is employed as a p oxy measu e o ax isks. Speci ically,
book- ax di e ence ola ili y is calcula ed as a 3-yea (yea − 1 o + 1) s anda d de ia ion o book- ax
di e ences (p e ax income deduc ed by income ax expense/s a u o y ax a e, scaled by o al asse s).
This measu emen was chosen because i is ep esen a i e o cap u ing ax isks by applying he ola-
ili y concep adap ed om Hamil on and S ekelbe g (2017) and D ake e al. (2019) when measu ing
ax isks.
CTRxCTS is he in e ac ion be ween CTR and CTS. This a iable cons i u es he p ima y ocus o in es-
iga ion in his s udy. The coe icien alue o β3is expec ed o be signi ican o suppo he hypo hesis.
o he a iables ha , acco ding o p io esea ch (D ake e al., 2019; Gued ib and Ma ouani (2023), may
also explain i m alue a e also conside ed. The a iables unde con ol a e AGE ( i m age), BIG (public
accoun ing i m indica o ), CCE (cash and cash equi alen ), DER (deb o equi y a io), EPS (ea nings pe
Table 1. sampe selec ion p ocedu e.
Desc ip ion Fi m-yea
ini ial obse a ion, companies wi h comple e inancial epo s and
annual epo s, pe iod 2012–2017
2094
Less: obse a ions wi h missing da a o audi epo lag (39)
Less: obse a ions wi h missing da a o ax isk (242)
numbe o inal obse a ions (pe iod 2012 o 2017, i m-yea ) 1813
6 E. SuWARDI ETAL.
sha e), RoA ( e u n on asse s), and SIZE ( i m size) (see Abdul Wahab & Holland, 2012; Akba i e al., 2019;
D ake e al., 2019; Gued ib & Ma ouani, 2023; Hasan e al., 2021; Tian ian e al., 2023).
The ini ial a iable, deno ed as AGE, ep esen s he company’s age as de e mined by he na u al log-
a i hm o i s ime since i s ini ial public o e ing on a s ock exchange. This s udy in ol es AGE as a con-
ol a iable because i p edic s ha he g ea e he age o he company, he lowe he audi epo lag
should be due o he lea ning p ocess o e ime. Second, BIG se es as a benchma k o publicly aded
accoun ing i ms. I i is one o he Big Fou , i s alue is one; o he wise, i is ze o. Thi dly, CCE is calcu-
la ed by di iding he cash and cash equi alen s o he company by i s o al asse s (Bhagawan &
Mukhopadhyay, 2024). Fu he mo e, he deb - o-equi y a io (DER) se es as an indica o o he i m’s
le e age. Company alue is impac ed by le e age (Kolsi & A ayah, 2018). EPS, o ea nings pe sha e, is
he i h me ic ha a company speci ies. Six h, e u n on asse s (RoA) also ep esen s he p o i abili y o
he company. SIZE, in conclusion, ep esen s he magni ude o he o ganiza ion as calcula ed by he
loga i hm o i s o al asse s. The scale o a business en i y is a c i ical de e minan o i m alue, acco d-
ing o he exis ing li e a u e (see Akba i e al., 2019; D ake e al., 2019; Gued ib & Ma ouani, 2023; Hasan
e al., 2021).
3.3. Da a analysis
Winso izing was he ini ial p ocedu e pe o med p io o commencing he p ima y analysis. The da a
alues a he speci ied pe cen iles—speci ically, he 5 h and 95 h pe cen iles—we e u ilized in lieu o he
ex eme da a alues o a a iable h ough he implemen a ion o his me hod. This me hod is consis en
wi h Suwa di and Sa agih (2023), Sa agih (2024), and Sa agih e al. (2024). The esea ch a iables’ ole -
ance and IF ( a iance in la ion ac o ) a e subsequen ly inco po a ed in o a comp ehensi e co ela ion
ma ix and desc ip i e s a is ics. This wo k employs a eg ession model selec ion p ocedu e (common
e ec , ixed e ec , and andom e ec ) (see Guja a i & Po e , 2009; Woold idge, 2016). This s udy hen
conduc ed he Chow es , LM es , and Hausman es (un abula ed) o de i e he p ima y eg ession
esul s (see Guja a i & Po e , 2009; Woold idge, 2016). o e all, he ixed e ec me hod was employed in
all he eg ession esul s p esen ed in his s udy. Las ly, his s udy in es iga ed h ee adi ional hypo h-
eses, namely mul icollinea i y, he e oscedas ici y, and au oco ela ion (see Guja a i & Po e , 2009;
Woold idge, 2016). I he e a e indica ions o iola ions o he classical assump ion es , a obus s anda d
e o p ocedu e will be ca ied ou o add ess hese issues (see Guja a i & Po e , 2009; Sa agih, 2024;
Sa agih e al., 2024; Woold idge, 2016).
3.4. Desc ip i e s a is ics and co ela ion analysis
The desc ip i e s a is ics o he esea ch a iables a e p esen ed in Table 2. The mean alue o a com-
pany (C AL) is 1.866. This alue exceeds 1, indica ing ha he sample companies, on a e age, possess
sha es wi h a s ock ma ke alue su passing hei book alue. Consequen ly, he a e age ax sa ings
(CTS) amoun o −0.008. In his pa icula example, he sample companies exhibi an a e age BTD o
nega i e alue, signi ying ha p e- ax income is diminished in compa ison o axable income. In addi-
ion, he a e age amoun o ax isks (CTR) is app oxima ely 0.051. This indica es ha , o e all, he ax
isks o he companies comp ising his sample a e compa a i ely mino .
Table 2. Desc ip i e s a is ic.
Va iable obs Mean s d. de Min Max
CVaL 1813 1.866 1.992 0.070 7.834
C s 1813 −0.008 0.048 −0.134 0.086
C R 1813 0.051 0.068 0.004 0.263
age 1813 2.769 0.486 1.792 3.332
Big 1813 0.405 0.491 0.000 1.000
CCe 1813 0.089 0.087 0.004 0.308
DeR 1813 1.279 1.248 0.009 5.023
ePs 1813 55.60 117.4 −67.71 450.1
Roa 1813 0.033 0.068 −0.103 0.181
siZe 1813 8.622 1.562 5.218 10.44
CoGENT BuSINESS & MANAGEMENT 7
The co ela ion ma ix (in Panel A) and he IF and ole ance (in Panel B) a e summa ized in Table 3.
Signi ican alues a e deno ed by numbe s in bold a he 5% le el. The C AL a iable exhibi s a signi i-
can co ela ion wi h all o he a iables (CTS, CTR, AGE, BIG, CCE, DER, EPS, RoA, SIZE), as indica ed in
Panel A o Table 3. I is no ewo hy ha C AL exhibi s a signi ican and posi i e co ela ion wi h ax
sa ings, while i demons a es a signi ican and nega i e co ela ion wi h ax isks. The CTS a iable is
signi ican ly and nega i ely co ela ed wi h CTR and DER, bu signi ican ly and posi i ely co ela ed wi h
BIG, CCE, EPS, RoA, and SIZE, as shown in Panel A o Table 3. The CTR a iable exhibi s a signi ican and
nega i e co ela ion wi h BIG, CCE, EPS, RoA, and SIZE.
4. Resul s, discussions, and implica ions
4.1. P ima y eg ession esul s
The p ima y eg ession indings om his s udy a e shown in Table 4. The ocus o his s udy is he
CTRxCTS in e ac ion a iable, as p e iously s a ed, since his esea ch empi ically examines only he mod-
e a ing e ec o ax isks on he ela ionship be ween ax sa ings and i m alue. The insigni icance o
he coe icien o he CTRxCTS a iable is es ablished by consul ing Table 4. In ligh o his, ou esea ch
hypo hesis ha ax isks mode a e he ela ionship be ween ax sa ings and i m alue is no suppo ed.
In con as o he esul s epo ed by D ake e al. (2019) and Gued ib and Ma ouani (2023), ou s udy
obse ed dis inc indings. Table 4 addi ionally illus a es ha se e al con ol a iables, including AGE,
BIG, and RoA, do no exe any in luence on he alue o he company. Addi ionally, company alue is
de e mined by he con ol a iables CCE, DER, EPS, and SIZE.
Table 3. Co ela ion ma ix, ViF, and ole ance.
Panel a
CVaL C s C R age Big CCe DeR ePs Roa siZe
CVaL 1.000
C s 0.129 1.000
C R −0.067 −0.271 1.000
age −0.123 0.013 0.027 1.000
Big 0.188 0.049 −0.153 0.112 1.000
CCe 0.151 0.170 −0.168 −0.034 0.121 1.000
DeR 0.188 −0.068 −0.003 −0.073 0.014 −0.208 1.000
ePs 0.191 0.346 −0.190 0.170 0.184 0.281 −0.133 1.000
Roa 0.324 0.587 −0.303 0.065 0.229 0.385 −0.211 0.567 1.000
siZe 0.164 0.191 −0.177 0.088 0.012 0.087 −0.050 0.338 0.219 1.000
Panel B
Mean C s C R age Big CCe DeR ePs Roa siZe
ViF 1.37 1.59 1.16 1.06 1.11 1.23 1.09 1.64 2.30 1.16
ol. 0.73 0.63 0.86 0.94 0.90 0.81 0.92 0.61 0.43 0.86
Table 4. P ima y eg ession esul s.a
Va iable Coe icien p- alue
C s 2.480 1.31 0.192
C R −1.039 −1.05 0.296
C RxC s −12.60 −0.60 0.548
age −0.457 −1.10 0.271
Big −0.187 −0.43 0.665
CCe 1.747* 1.83 0.068
DeR 0.649*** 8.16 0.000
ePs 0.002* 1.78 0.077
Roa 1.564 1.12 0.263
siZe −1.393*** −3.01 0.003
Cons 14.16*** 3.92 0.000
obs. 1813
F-s a . 12.74***
P ob. F 0.000
adjus ed R-squa ed 0.222
aRobus s anda d e o is used due o he nonno mali y and he e oscedas ici y o esiduals. Panel eg ession using he ixed e ec me hod.
he supe sc ip s ***, **, and * ep esen s a is ical signi icance a he 1%, 5%, and 10% le els, espec i ely.
14 E. SuWARDI ETAL.
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