The effect of return on assets, company size, and company risk on tax avoidance

Abstract

Purpose: This study aims to determine the effect of Return On Assets, Company Size, and Company Risk on Tax Avoidance in manufacturing companies listed on the Indonesia Stock Exchange from 2017 to 2020.

Methods: This study uses an associative strategy with a causal quantitative approach and analyzes data through descriptive statistics, panel data regression, and hypothesis testing using Eviews 10. The object of research is manufacturing companies listed on the Indonesia Stock Exchange for the 2017-2020 period. The sample was taken purposively, consisting of 10 companies with 40 observations. Secondary data were obtained from the official IDX website (www.idx.co.id), and hypothesis testing was carried out using the t-test.

Findings: The results of this study concluded that (1) return on assets affects tax avoidance, (2) company size has no effect on tax avoidance, and (3) company risk affects tax avoidance.

Practical Implications: The study shows that ROA significantly affects tax avoidance, with well-performing firms being more aggressive in this strategy. Firm size has no effect, and firm risk is also related to tax avoidance, with risky management more likely to adopt this strategy. Firms should consider ROA and risk in their tax policies.