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Profitability, Firm Size, Leverage, and Tax Avoidance in Indonesian Food and Beverage Companies

In: Proceedings of the 10th International Conference on Accounting, Management, and Economics (10th ICAME 2025)

Author

Listed:
  • Hardiansyah Hardiansyah

    (Hasanuddin University)

  • Fauziah Umar

    (Hasanuddin University)

Abstract

This study analyzes the influence of corporate characteristics on tax avoidance practices among food and beverage companies listed on the Indonesia Stock Exchange (IDX) from 2019 to 2023. The research focuses on three main variables: profitability, firm size, and leverage. The analysis reveals that profitability, measured by Return on Assets (ROA), does not have a significant impact on tax avoidance, a significance level of 0.085. Similarly, firm size is not found to significantly affect tax avoidance, a significance level of 0.130. In contrast, leverage, measured by the Debt to Equity Ratio (DER), shows a positive and significant relationship with tax avoidance, a significance level of 0.018. These findings suggest that companies with higher leverage are more likely to engage in tax avoidance strategies by utilizing interest expenses to reduce taxable income. Overall, the results highlight that tax avoidance is a multifaceted issue influenced by various factors, particularly financial strategies related to capital structure.

Suggested Citation

  • Hardiansyah Hardiansyah & Fauziah Umar, 2026. "Profitability, Firm Size, Leverage, and Tax Avoidance in Indonesian Food and Beverage Companies," Advances in Economics, Business and Management Research, in: Mursalim Nohong & Rianda Ridho Hafizh Thaha & Muhammad Try Dharsana & Andi Tenri Harahap & Fakhrul I (ed.), Proceedings of the 10th International Conference on Accounting, Management, and Economics (10th ICAME 2025), pages 2509-2518, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6239-709-5_175
    DOI: 10.2991/978-94-6239-709-5_175
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