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Tax avoidance behaviour towards the cost of debt

Author

Listed:
  • Indah Masri
  • Dwi Martani

Abstract

The aim of the research is to analyse tax avoidance behaviour to cost of debt (COD) moderated by tax rate changes and family ownership structure. The research used the sample manufacturing firms in Indonesia Stock Exchange for the period 2008-2010. The study finds that tax avoidance has positive influence on COD. Tax avoidance creates a risk thereby increasing the COD. In the period before tax rate reduction, the influence of tax avoidance on COD is smaller compared with the period after tax reduction; this indicates the presence of earning management conducted by the company before tax rate reduction. Family ownership structure causes greater influence over tax avoidance on COD; this shows that family ownership increases tax aggressive behaviour. The results of this research are contrary with the research conducted by Lim (2011), which shows negative relationship between tax avoidance and the COD.

Suggested Citation

  • Indah Masri & Dwi Martani, 2014. "Tax avoidance behaviour towards the cost of debt," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 7(3), pages 235-249.
    • Handle: RePEc:ids:ijtrgm:v:7:y:2014:i:3:p:235-249
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    Cited by:

    1. Arie Pratama, 2020. "Corporate governance, foreign operations and transfer pricing practice: the case of Indonesian manufacturing companies," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 24(2), pages 185-200.

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