Proceedings of the First Lekantara Annual Conference on Public Administration, Literature, Social Sciences, Humanities, and Education, LePALISSHE 2021, August 3, 2021, Malang, Indonesia

Research Article

The Effect of Profitability, Foreign Activity, and Hedging on Tax Avoidance with Executive Character as Moderating Variables

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  • @INPROCEEDINGS{10.4108/eai.3-8-2021.2315141,
        author={Puteri Cinta Annisa Siregar and Gita Darin Kurnia Saputri and IGB  Nowindra and Afifah  Farhanah and Deni  Darmawati},
        title={The Effect of Profitability, Foreign Activity, and Hedging on Tax Avoidance with Executive Character as Moderating Variables},
        proceedings={Proceedings of the First Lekantara Annual Conference on Public Administration, Literature, Social Sciences, Humanities, and Education, LePALISSHE 2021, August 3, 2021, Malang, Indonesia},
        publisher={EAI},
        proceedings_a={LEPALISSHE},
        year={2022},
        month={1},
        keywords={profitability; foreign activity; hedging; tax avoidance; executive characteristics},
        doi={10.4108/eai.3-8-2021.2315141}
    }
    
  • Puteri Cinta Annisa Siregar
    Gita Darin Kurnia Saputri
    IGB Nowindra
    Afifah Farhanah
    Deni Darmawati
    Year: 2022
    The Effect of Profitability, Foreign Activity, and Hedging on Tax Avoidance with Executive Character as Moderating Variables
    LEPALISSHE
    EAI
    DOI: 10.4108/eai.3-8-2021.2315141
Puteri Cinta Annisa Siregar1,*, Gita Darin Kurnia Saputri1, IGB Nowindra1, Afifah Farhanah1, Deni Darmawati1
  • 1: Universitas Trisakti
*Contact email: pcintasiregar@gmail.com

Abstract

This quantitative study determined the effect of profitability, foreign activity, and hedging on tax avoidance with executive characteristics as a moderating variable. Samples were 16 multinational companies listed on the Indonesia Stock Exchange from 2017 to 2019 with hedging transactions. They were chosen purposively and observed for three years, so the study had 48 samples in total. Data were analyzed using multiple regression analysis. The results showed that profitability negatively affected tax avoidance, foreign activity positively affected tax avoidance, and hedging positively affected tax avoidance. Findings confirmed that executives with a risk-taker characteristic could weaken the negative effect of profitability on tax avoidance and weaken the positive influence of foreign activity on tax avoidance. It indicated that executives with a risk-taker characteristic might conduct tax avoidance practices in companies with high foreign transaction activities. Executives with a risk-taker characteristic had no influence on the relationship between hedging and tax avoidance.