CEO overconfidence, tax avoidance, and education foundation

Sumunar, Kurnia Indah; Jannah, Lu’lu’ul; Aulia, Darlin

doi:10.20885/jaai.vol23.iss2.art4

Cited by 7 publications

(10 citation statements)

References 17 publications

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“…This is because there is a common belief in the company's business situation and because there are risks that they dare to bear due to this tax avoidance action that allows them to cooperate in tax avoidance actions. This research also supports research (Aliani et al, 2016;Chyz et al, 2019;Kubick & Lockhart, 2017;Nurul Hidhayana, 2021;Sumunar et al, 2019) who stated that CEO overconfidence has a positive effect on tax avoidance. CEO overconfidence overstates tax savings and thus overconfidence and tax minimization will have a positive effect.…”

Section: Introductionsupporting

confidence: 86%

“…Tax avoidance practices in companies can occur because they are influenced by various factors. In the perspective of tax avoidance, managers are interested in maximizing their own interests by controlling corporate tax payments (Sumunar et al, 2019). The difference in interests between managers and company owners encourages managers to behave unethically, namely by carrying out tax avoidance actions to meet their personal interests.…”

Section: Introductionmentioning

confidence: 99%

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Tax Avoidance: The Role of Managerial Ability and CEO Overconfidence

Tuljannah,

Helmy

2023

WRA

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Purpose – The purpose of this study is to examine the effect of CEO managerial ability and overconfidence on tax avoidance.Design/methodology/approach – The study was conducted on 120 annual reports of mining sector companies listed on the Indonesian Stock Exchange (IDX) from 2017-2021. Multiple regression was used to test the hypotheses. Tax avoidance was measured by CETR. Managerial ability was measured by firm efficiency and CEO overconfidence is measured by five proxies related to company-specific scores.Findings – This study shows that managerial ability has negative significant effect on tax avoidance. The results reveal that CEO overconfidence has no significant effect on tax avoidance. Managers with high managerial ability will not only increase profits in the short term, but also consider the company's survival in the long term, so; they will reduce tax avoidance activities. Meanwhile, CEO's overconfidence cannot influence the tax management that has been determined by the company.Originality/value– This study attempts to fill the gap in the literature about the influence of management attributes on company decision making in tax avoidance activities. This study indicates that the tax avoidance decision in the company cannot be explained by the executive's psychological characteristics only.Research limitations/Implications – This research is limited to how tax avoidance is influenced by managerial ability and overconfidence in decision making with characteristics related to psychological and internal factors. Future research can add other factors such that can influence decision making in conducting tax avoidance, such as rewards, experience, performance measures and other factors. This study has implications in decision making for policymakers in relation to designing future tax systems to reduce the possibility of companies engaging in tax avoidance practices. Companies are also required to be more transparent in disclosing their performance in generating income to avoid tax avoidance activities.Keywords: Managerial ability, overconfidence, tax avoidance.Article Type: Research Paper.

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Section: Introductionsupporting

confidence: 86%

Section: Introductionmentioning

confidence: 99%

Tax Avoidance: The Role of Managerial Ability and CEO Overconfidence

Tuljannah,

Helmy

2023

WRA

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“…An independent variable is a variable that acts as the primary variable that causes the change in the tested variable (Sugiyono, 2019). CEO overconfidence variable is proxied with excess investment (Sumunar, Jannah & Aulia, 2019), which is obtained by regressing asset growth with sales growth, and then is measured back using a dummy variable. The residual value is greater than the median value for one year, indicating the company has excess investment, then it is given a value of 1 (one) and 0 (zero) otherwise.…”

Section: Methodsmentioning

confidence: 99%

“…Based on the agency theory, there is harmony between the interests of corporate management and investors: tax avoidance is regarded as a beneficial action for the management and is aimed at maximizing investors' interests. Sumunar, Jannah, and Aulia (2019) utters that CEO overconfidence is crucial in encouraging tax policies to commit tax avoidance as it corresponds with the company's goals to increase shareholders' wealth by maximizing corporate profits and obtaining incentives from shareholders for their performances. Based on the above descriptions, the alternative hypothesis for this research is formulated as follows:…”

Section: Introductionmentioning

confidence: 99%

Influence of Ceo Over Confidence, Gender Diversity and Profitability on Corporate Tax Avoidance: Empirical Study on Manufacturing Companies Listed on the Indonesia Stock Exchange

Sugiono

Anggraeny

2022

J. Appl. Fin. & Acc.

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This research aims to determine the influence of individual and company characteristics on tax avoidance by examining and analyzing the impact of CEO overconfidence, gender diversity, and profitability on corporate tax avoidance. The rationale of this research is that there is still a lack of research, the authors identify the relationship between CEO overconfidence, gender diversity, and profitability using tax avoidance measurement, i.e., cash effective tax rate (CETR) followed by control variables of sales growth and capital intensity. This study used secondary data with entire manufacturing companies listed on Indonesia Stock Exchange for 2017-2019. The sample was determined using the purposive sampling method and obtained 96 samples. The analysis method used in this research is panel data regression with corporate tax avoidance as the dependent variable and CEO overconfidence, gender diversity, and profitability as independent variables. This research indicates that profitability positively affects corporate tax avoidance, while CEO overconfidence and gender diversity have no significant effect on corporate tax avoidance.

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“…of total assetsBae et al (2017),Cahyono et al (2016),Lee and Kao (2018),Salehi et al (2020),Sumunar et al (2019), Suyadnya and Supadmi (2017) Firm Age AGE The number of years since the company has been listed on the Indonesia Stock Exchange Salehi et al (2020) Profitability ROI Return on Investment, calculated by Earnings After Tax divided by Total Assets Berliana and Mahpudin (2021), Salehi et al (2020) Leverage DAR It is calculated through total debt scaled by total assets Lee and Kao (2018), Rizqia and Lastiati (2021), Rusydi (2013), Salehi et al (2020), Sumunar et al (2019)…”

mentioning

confidence: 99%

Auditor characteristics on tax avoidance by non-financial companies: Evidence from the Indonesia Stock Exchange

Zain,

Harsa Sumarta,

Gandhi Amidjaya

2023

J. Akun. Audit. Ind.

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Tax revenue realization in Indonesia is not inseparable from tax avoidance by business entities. The research was conducted to examine the effect of auditor characteristics as proxied by auditor industry specialization, audit tenure, and audit opinion on tax avoidance by non-financial companies listed on the IDX. This study used a set of panel data that consisted of non-financial companies listed on the IDX operating in the 2017-2020 period. The data were obtained from the companies’ annual report. The result of this study demonstrated that auditor industry specialization had a significant positive effect on tax avoidance, while audit tenure did not affect tax avoidance. There was a positive relationship between audit opinion and tax avoidance. This research has limitations as it was only conducted for a short period. Further research can develop this model by including variables which were excluded from this study and involving more samples and sectors of the research objects.

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CEO overconfidence, tax avoidance, and education foundation

Cited by 7 publications

References 17 publications

Tax Avoidance: The Role of Managerial Ability and CEO Overconfidence

Tax Avoidance: The Role of Managerial Ability and CEO Overconfidence

Influence of Ceo Over Confidence, Gender Diversity and Profitability on Corporate Tax Avoidance: Empirical Study on Manufacturing Companies Listed on the Indonesia Stock Exchange

Auditor characteristics on tax avoidance by non-financial companies: Evidence from the Indonesia Stock Exchange

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