CEO characteristics and Tax Aggressiveness in Indonesian Family Firms: The Upper Echelons Theory Perspective

Rachmawati Meita Oktaviani, Abdul Rohman and Zulaikha Zulaikha

Journal of Tax Reform, 2024, vol. 10, issue 1, 149-161

Abstract: Tax aggressiveness is an effort that companies can undertake to save on tax payments. One of the factors driving why tax aggressiveness is pursued is the presence of CEO. This study emphasizes the characteristics of CEO. Therefore, this study aims to analyze the effect of CEO characteristics on tax aggressiveness based on the upper echelon’s theory perspective. CEO characteristics are divided into CEO tenure, educational background, and gender. CEO tenure in this study is proxied by how long someone has held the position of CEO, while educational background and gender are proxied using dummy variables. The choice of profitability is because profit is used as the main basis in tax calculation. The sampling technique used was purposive sampling, with an observation period of 2019–2022 in the seventy family firms listed on the Indonesia Stock Exchange (IDX). The data used is panel data and analyzed employing the EViews program. The model estimation tests feasible to use was the fixed effect model (FEM). The regression results show that CEO tenure, educational background, and gender partially and simultaneously affected tax aggressiveness. The study results generally indicate that family-owned companies tend to utilize more tax aggressiveness. At the same time, the level of education of the general director has a negative effect on tax aggressiveness, i.e. the higher the level of education, the less tax aggressiveness. The gender asymmetry is that women as family business leaders demonstrate greater tax aggressiveness than male leaders. Therefore, the benefit of this research from the government’s perspective is to formulate policies to reduce efforts of tax aggressiveness, especially for companies predominantly owned by families.

Keywords: CEO tenure; CEO educational background; CEO gender; tax aggressiveness; family firms (search for similar items in EconPapers)
JEL-codes: E21 H26 H71 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:aiy:jnljtr:v:10:y:2024:i:1:p:149-161

DOI: 10.15826/jtr.2024.10.1.162

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