Moderated by political connection: Profitability and leverage on tax avoidance

Eka Kurnia; Made Gede Wirakusuma; I Gusti Ayu Made Asri Dwija Putri; Gerianta Wirawan Yasa

doi:10.21744/ijbem.v8n2.2389

Authors

Eka Kurnia
ekagobah87@gmail.com
Udayana University, Denpasar, Indonesia
Made Gede Wirakusuma Udayana University, Denpasar, Indonesia
I Gusti Ayu Made Asri Dwija Putri Udayana University, Denpasar, Indonesia
Gerianta Wirawan Yasa Udayana University, Denpasar, Indonesia

Keywords:

Leverage, Political Connection, Profitability, Tax Avoidance

Abstract

Along with the rampant cases of tax avoidance in the health sector and the telecommunications sector, this study examines whether the profitability and leverage of companies in these two sectors affect tax avoidance behavior. This study also examines how political connection moderates the relationship between these two variables on tax avoidance. Data was collected from companies listed on the Indonesia Stock Exchange over the span of 2020-2023 using purposive sampling technique. The analysis found a positive relationship between company profitability and tax avoidance behavior. The same relationship was found between leverage and tax avoidance behavior. Furthermore, using the Moderated Regression Analysis (MRA) technique, this study confirms the moderating role of political connection in influencing corporate tax avoidance behavior.

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