Proceedings of the 5th International Public Sector Conference, IPSC 2023, October 10th-11th 2023, Bali, Indonesia

Research Article

The Effect of Tax Avoidance on Firm Value

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  • @INPROCEEDINGS{10.4108/eai.10-10-2023.2342208,
        author={Angeline  Walah and Gabriella  Juarso and Stella  Santoso and John  Kusno and Adrian  Teja},
        title={The Effect of Tax Avoidance on Firm Value},
        proceedings={Proceedings of the 5th International Public Sector Conference, IPSC 2023, October 10th-11th 2023, Bali, Indonesia},
        publisher={EAI},
        proceedings_a={IPSC},
        year={2023},
        month={12},
        keywords={deferred tax assets deferred tax liabilities stock market-capitalization tax avoidance},
        doi={10.4108/eai.10-10-2023.2342208}
    }
    
  • Angeline Walah
    Gabriella Juarso
    Stella Santoso
    John Kusno
    Adrian Teja
    Year: 2023
    The Effect of Tax Avoidance on Firm Value
    IPSC
    EAI
    DOI: 10.4108/eai.10-10-2023.2342208
Angeline Walah1,*, Gabriella Juarso1, Stella Santoso1, John Kusno1, Adrian Teja1
  • 1: Universitas Prasetiya Mulya
*Contact email: angeline.walah@student.pmsbe.ac.id

Abstract

This study aims to understand the effect of funds from tax avoidance to firm value. The effect of tax avoidance on firm value was estimated using cross-section regression analysis. The sample is non-financial public firms listed in ASEAN countries, such as Indonesia, Malaysia, Singapore, Thailand, Philippines, and Vietnam, for 2015-2019. We find that tax avoidance increases the average five-year firm stock market capitalization. The findings suggest that firms receive financial benefits beyond larger liquidity and lower cost of funds but higher firm value. The business implication is that larger market capitalization enables the firm to have access to a greater pool of sources of financing with a lower cost of funds. The government implication is that the government will receive larger future tax revenue.