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Research Article Open access CC BY 4.0

Audit Committee, Firm Size on Tax Avoidance: Profitability as a Mediator

Octa Ramadina Putri, Sulis Rochayatun

Asian Journal of Economics, Business and Accounting · pp. 305–316 · Published 19 May 2024

10.9734/ajeba/2024/v24i61363

Abstract

Aims: This study investigates tax avoidance strategies in Indonesia's property and real estate industry, considering firm size, profitability, and audit committee as variables. Study Design:  A quantitative study is used to collect data that can be measured in numbers and analysed statistically. Place and Duration of Study: Engaging 15 businesses in the property and real estate industry that has maintained a presence on the Indonesia Stock Exchange for a decade. Methodology: In the study, an empirical analysis was conducted using data contained in the company's financial statements to test tax avoidance in Indonesia. This study used a sample of 150 selected through a purposive sampling approach. The sample was then analysed by testing the direct effects and indirect effects using Path Analysis. In this study, the analysis technique used was SPSS 24 software. Results: The results show a strong relationship between tax evasion, firm size, profitability, and the audit committee. Furthermore, it has been demonstrated that the audit committee, firm size, and tax avoidance can all be mediated by profitability. It is important to remember that when profitability is strong, there is a greater chance of tax avoidance. Conclusion: Further research is expected to expand the coverage by using more companies from different sectors, as well as adding additional variables as part of the analysis. This is important because the research focuses only on one sector and uses a limited number of samples. For investors, assessing the profitability of companies and compliance with tax regulations becomes crucial to identifying potential investment risks.

Audit committee firm size tax avoidance profitability real estate encompass

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