The Role of Multiple Large Shareholders (MLS) and Family Firms (As Moderating) on Tax Avoidance in Indonesia

Nindhita Nisrina Sari, Siti Nuryanah and Sri Indah Nikensari ()
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Nindhita Nisrina Sari: Universitas Indonesia
Siti Nuryanah: Universitas Indonesia
Sri Indah Nikensari: Universitas Negeri Jakarta

A chapter in Proceedings of the 2023 Brawijaya International Conference (BIC 2023), 2024, pp 704-713 from Springer

Abstract: Abstract Conflicts of interest between shareholders often arise, including in tax avoidance decisions. This research aims to explore the role of multiple large shareholders (MLS) on tax avoidance in the firm, and whether family-held firms influence its relation. MLS explained as the second largest shareholders who at least held 10% of shares, while tax avoidance measured by book-tax differences. This research used panel data regression analysis techniques to analyze sample data from 68 public companies in Indonesia from 2017 until 2020. The results show that MLS is negative and significantly related to corporate tax avoidance, indicating that MLS has incentives to monitor and control agency problems that lead to reduced tax avoidance practices for private benefits. In addition, family firms strengthen the negative relationship between MLS and tax avoidance. This shows that the existence of MLS is effective in reducing tax avoidance since they have quite high voting rights to monitor corporate tax avoidance. On the other hand, family-held firms further strengthen MS in reducing tax avoidance as their family names could degenerate if they collude to aggressively avoid paying taxes.

Keywords: Shareholders; Book-tax differences; Family firms (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-525-6_77

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DOI: 10.2991/978-94-6463-525-6_77

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