Analyst Coverage and Corporate Tax Aggressiveness in Indonesia Stock Exchange

Authors

DOI:

https://doi.org/10.21512/bbr.v11i1.5996

Keywords:

analyst coverage, corporate tax aggressiveness, Indonesia Stock Exchange

Abstract

This research aimed to examine the effects of analyst coverage on corporate tax aggressiveness in emerging markets that stock prices did not reflect available information in the capital market. The samples were 537 companies listed on the Indonesia Stock Exchange from 2015-2016. The samples were taken based on the criterion set by the researcher. The data were obtained from financial statements and fact books published by the Indonesia Stock Exchange. Abnormal Book-Tax Differences (ABTD) was used as a proxy of tax aggressiveness. Analyst coverage was measured by average income predicted from the year (t-1). The equation model showed the effects of analyst coverage on tax aggressiveness using the logistic regression. The findings show that, in a weak form of market, analyst coverage has a positive effect on tax aggressiveness. It means analyst coverage encourages management to carry out tax aggressiveness. The impact is that after-tax income becomes higher, it also results in higher earnings per share, but the tax burden paid to the government is decreased.

Dimensions

Plum Analytics

References

Ady, S. U. (2017). Eksplorasi tingkat efisiensi pasar modal Indonesia studi kasus di Bursa Efek Indonesia. Jurnal Bisnis dan Manajemen, 1(2), 103-123. https://dx.doi.org/10.25139/ekt.v0i0.184

Agresti, A. (2010). Analysis of ordinal categorical data (2nd ed.). New Jersey: John Wiley & Sons, Inc. https://doi.org/DOI: 10.1002/9780470594001

Allen, A., Francis, B. B., Wu, Q., & Zhao, Y. (2016). Analyst coverage and corporate tax aggressiveness. Journal of Banking & Finance, 73(December), 84-98. https://doi.org/10.1016/j.jbankfin.2016.09.004

Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., & Larcker, D. F. (2015). Corporate governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), 1-17. https://doi.org/10.1016/j.jacceco.2015.02.003

Beuselinck, C., Blanco, B., Dhole, S., & Lobo, G. J. (2018). Financial statement readability and tax aggressiveness. Retrieved from https://ssrn.com/abstract=3261115

udihargono, K., Semuel, H., & Basana, S. (2017). Analisa efisiensi pasar modal bentuk lemah melalui evaluasi pergerakan harga saham di Bursa Efek Indonesia. Petra Business and Management Review, 3(2), 106-119.

Chun, H. M., & Shin, S. Y. (2018). Does analyst coverage enhance firms’ corporate social performance? Evidence from Korea. Sustainability, 10(7), 1-16. https://doi.org/10.3390/su10072561

Graham, J. R., Hanlon, M., Shevlin, T., & Shroff, N. (2014). Incentives for tax planning and avoidance: Evidence from the field. The Accounting Review, 89(3), 991-1023. https://doi.org/10.2308/accr-50678

Halioui, K., Neifar, S., & Abdelaziz, F. B. (2016). Corporate governance, CEO compensation and tax aggressiveness: Evidence from American firms listed on the NASDAQ 100. Review of Accounting and Finance, 15(4), 445-462. https://doi.org/10.1108/RAF-01-2015-0018

Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50(2-3), 127-178. https://doi.org/10.1016/j.jacceco.2010.09.002

Hanlon, M., & Slemrod, J. (2009). What does tax aggressiveness signal? Evidence from stock price reactions to news about tax shelter involvement. Journal of Public Economics, 93(1-2), 126-141. https://doi.org/10.1016/j.jpubeco.2008.09.004

He, G., Bai, L., & Ren, H. M. (2019). Analyst coverage and future stock price crash risk. Journal of Applied Accounting Research, 20(1), 63-77. https://doi.org/10.1108/JAAR-09-2017-0096

He, J. J., & Tian, X. (2013). The dark side of analyst coverage: The case of innovation. Journal of Financial Economics, 109(3), 856-878. https://doi.org/10.1016/j.jfineco.2013.04.001

Hosmer, D. W., & Lemeshow, S. (1989). Applied logistic regression. USA: John Wiley & Sons, Inc.

Ifurueze, M. S., John-Akamelu, R. C., & Iyidiobi, F. C. (2018). Effect of corporate tax aggressiveness on firm growth in Nigeria: An empirical analysis. International Journal of Trend in Scientific Research and Development (IJTSRD), 2(6), 1628-1639. https://doi.org/10.31142/ijtsrd18928

Kofarbai, H. Z., & Zubairu, M. (2016). Efficient market hypothesis in emerging market-A conceptual analysis. European Scientific Journal, 12(25), 260-270. https://doi.org/10.19044/esj.2016.v12n25p260

Koubaa, R. R., & Jarboui, A. (2017). Normal, abnormal book-tax differences and accounting conservatism. Asian Academy of Management Journal of Accounting & Finance, 13(1), 113-142. https://doi.org/10.21315/aamjaf2017.13.1.5

Kubick, T. R., & Lockhart, G. B. (2017). Corporate tax aggressiveness and the maturity structure of debt. Advances in Accounting, 36(March), 50-57. https://doi.org/10.1016/j.adiac.2016.10.001

Kurniawan, M. I., & Nuryanah, S. (2017). The effect of corporate tax avoidance on the level of corporate cash holdings: Evidence from Indonesian public listed companies. Australasian Accounting, Business and Finance Journal, 11(4), 38-52. https://doi.org/10.14453/aabfj.v11i4.4

Kusumayanti, K. R., & Suarjaya, A. A. G. (2018). Reaksi pasar modal Indonesia terhadap pengumuman kemenangan Donald Trump dalam pilpres Amerika Serikat 2016. E-Jurnal Manajemen Unud, 7(4), 1713-1741.

Lee, C. M. C., & So, E. C. (2017). Uncovering expected returns: Information in analyst coverage proxies. Journal of Financial Economics, 124(2), 331-348. https://doi.org/10.1016/j.jfineco.2017.01.007

Lo, H. C. (2017). Do firm size influence financial analyst research reports and subsequent stock performance. Accounting and Finance Research, 6(4), 181-196. https://doi.org/10.5430/afr.v6n4p181

Martinez, A. L., & Ramalho, V. P. (2017). Tax aggressiveness and corporate sustainability in Brazil. Revista Catarinense da Ciência Contábil, 16(49), 7-16. https://doi.org/10.16930/2237-7662/rccc.v16n49.2366

Nakazono, Y., Koga, M., & Sugo, T. (2018). Private information and analyst coverage: Evidence from firm survey data. Bank of Japan Working Paper Series 2018.

Nasution, Y. S. J. (2015). Hypothesis pasar efisien/efficient market hypothesis (Pasal modal menurut teori fama dan pandangan Islam). Jurnal Perspektif Ekonomi Darussalam, 1(1), 25-43. https://doi.org/10.24815/jped.v1i1.6518

Richardson, G., Taylor, G., & Lanis, R. (2016). Women on the board of directors and corporate tax aggressiveness in Australia. Accounting Research Journal, 29(3), 313-331. https://doi.org/10.1108/ARJ-09-2014-0079

Shamshir, M., & Mustafa, K. (2014). Efficiency in stock markets a review of literature. International Journal of Economics, Commerce and Management, II(12), 1-22.

Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. The Journal of Finance, 19(3), 425-442.

Ţiţan, A. G. (2015). The efficient market hypothesis: Review of specialized literature and empirical research. Procedia Economics and Finance, 32, 442-449. https://doi.org/10.1016/S2212-5671(15)01416-1

Wahab, E. A. A., Ariff, A. M., Marzuki, M. M., & Sanusi, Z. M. (2017). Political connections, corporate governance, and tax aggressiveness in Malaysia. Asian Review of Accounting, 25(3), 424-451. https://doi.org/10.1108/ARA-05-2016-0053

Wang, L. (2015). Tax enforcement, corporate tax aggressiveness, and cash holdings. China Finance Review International, 5(4), 339-370. https://doi.org/10.1108/CFRI-12-2014-0099

Yee, C. S., Sapiei, N. S., & Abdullah, M. (2018). Tax avoidance, corporate governance and firm value in the digital era. Journal of Accounting and Investment, 19(2), 160-175. https://doi.org/10.18196/jai.190299

Downloads

Published

2020-03-31
Abstract 841  .
PDF downloaded 382  .