Analysis of Tax Aggressiveness and Financial Reporting Aggressiveness on Public Companies in Indonesia 2010-2014

Abstract

This research examines the implications and impacts of companies asset revaluation policies in response to tax incentives in 2015. This research adopts a descriptive and narrative approach. The results show that there an increased number of companies opted for assets revaluation policy because of the incentives. Companies that adopt an assets revaluation policy provide more accurate information related to the value of their fixed assets and investment properties. Method of disclosure of asset revaluation differs depending on the revaluation type chosen. The impacts of these assets revaluations are increasing a company's equity, reductions in companies' leverage ratios, deferred tax effects.

Earnings Management and Tax Minimization: Comprehensive Analysis of Book-Tax Differences in Indonesia

“…This implies that companies implementing AEM practices tend to engage in higher levels of tax avoidance. These results are consistent with previous studies conducted by Frank et al (2009), Ginting & Martani (2017), Surahman & Firmansyah (2017), Morais &Macedo (2021), andMasri (2022). Moving on to REM, as shown in Tables 5 and 7, different REM methods shows varying results.…”

“…Further supporting this theory, Morais and Macedo (2021) suggest that companies engaging in AEM activities are likely to have a larger disparity between their reported book earnings and tax earnings, resulting in a higher Abnormal Book-Tax Difference (ABTD). Ginting & Martani (2017) Earnings management theory discusses how managers use judgement in financial reporting and in structuring transactions to influence contractual outcomes that depend on reported accounting numbers. In addition to using accruals, earnings management also includes optimizing profit levels through real business activities.…”

“…The size is measured by taking the natural logarithm of the total assets. A higher pretax return on assets PTROAit indicates that a company is more likely to engage in earnings management and tax avoidance (Ginting & Martani, 2017). This variable is calculated by dividing the pretax income by total assets (…”

“…Previous studies indicate that highgrowth and highly leveraged companies are more inclined to engage in tax avoidance, while larger companies are also more likely to be involved (Lyon, 2014) (Dechow et al, 2010) (Beneish, 1999). Moreover, as profitability increases, companies tend to adopt both earnings management and tax avoidance strategies (Ginting & Martani, 2017).…”