Leverage, Capital Intensity, and Institutional Ownership as Determinants of Tax Avoidance in Indonesian Manufacturing Firms

M. Ali Harpa () and Syarifuddin Rasyid
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M. Ali Harpa: Hasanuddin University
Syarifuddin Rasyid: Hasanuddin University

A chapter in Proceedings of the 10th International Conference on Accounting, Management, and Economics (10th ICAME 2025), 2026, pp 2590-2602 from Springer

Abstract: Abstract This study investigates the impact of leverage, capital intensity, and institutional ownership on tax avoidance in manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2020 to 2022. Using multiple linear regression analysis, tax avoidance was assessed through the Effective Tax Rate (ETR). The results indicate that leverage significantly affects tax avoidance, with a p-value of 0.0010, suggesting that higher leverage leads to greater tax avoidance, as companies use debt interest payments to reduce taxable income. In contrast, the capital intensity ratio does not significantly influence tax avoidance, with a p-value of 0.0743, indicating that capital investment does not play a major role in reducing taxes. Institutional ownership, however, shows a significant positive effect on tax avoidance, with a p-value of 0.0025. This suggests that companies with higher institutional ownership are more likely to engage in tax avoidance strategies, likely due to increased pressure from institutional investors. The findings emphasize that while leverage and institutional ownership significantly contribute to tax avoidance, capital intensity does not have a substantial impact. This study offers valuable insights into the financial and governance factors influencing tax behavior in Indonesian manufacturing firms.

Keywords: Tax Avoidance; Leverage; Capital Intensity Ratio; Institutional Ownership; IDX (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-94-6239-709-5_180

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