Article Sidebar

Download
Full text PDF
Statistic
Read Counter : 436 Download : 428

Downloads

Download data is not yet available.

Main Article Content

Abstract

This study investigates the effect of transfer pricing, earnings management, and firm size on tax avoidance, with managerial ownership as a distinguishing factor. Using a sample of 43 manufacturing companies listed on the Indonesia Stock Exchange from 2019 to 2023, the study employs panel data regression with the Common Effect Model. The results show a significant negative effect of transfer pricing on tax avoidance in companies without managerial ownership, indicating its use as an active tax avoidance strategy. Conversely, this effect is insignificant in firms with managerial ownership, suggesting greater caution due to reputational risks. Earnings management significantly affects tax avoidance in firms with managerial ownership, highlighting the dual role of managers as decision-makers and shareholders. Firm size, however, does not significantly influence tax avoidance across both types of ownership. These findings emphasize the moderating role of managerial ownership and support agency theory by illustrating how ownership structure shapes strategic financial behavior. This study contributes to the literature by offering a more nuanced understanding of tax avoidance practices in Indonesia’s manufacturing sector.

Keywords

Transfer Pricing Earnings Management Firm Size Tax Avoidance Managerial Ownership Agency Theory

Article Details

License

Copyright (c) 2025 Hendro Paulus

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access). 
How to Cite
Paulus, H., Tarmidi, D., & Daito, A. (2025). The effect of transfer pricing, earnings management, and company size on tax avoidance: Managerial ownership analysis. Journal of Contemporary Accounting, 7(2), 75–88. https://doi.org/10.20885/jca.vol7.iss2.art1
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Alexander, N. (2024). Determinants of transfer pricing decisions and its impact on tax avoidance. Riset Akuntansi dan Keuangan Indonesia, 9(2), 200–206.
  2. Apriatna, P., & Oktris, L. (2022). The effect of profitability, company size, and sales growth on tax avoidance with leverage as a moderating variable. International Journal of Innovative Science and Research Technology, 7(8), 223–230.
  3. Astrina, F., Aurellita, V., & Kurniawan, M. O. (2022). The influence of transfer pricing and sales growth on decisions tax avoidance. International Journal of Multidisciplinary Research and Analysis, 5(11), 3188–3197.
  4. Bougacha, F., & Guedrib, M. (2025). Tax risk and firm risk: Does firm size matter? International Journal of Ethics and Systems.
  5. Cabello, O. G., Gaio, L. E., & Watrin, C. (2019). Tax avoidance in management-owned firms: Evidence from Brazil. International Journal of Managerial Finance, 15(4), 580–592.
  6. Cahyarani, A., & Martias, D. (2024). Effect of institutional ownership, managerial ownership, profitability, company size and tax avoidance on cost of debt. InJEBA: International Journal of Economics, Business and Accounting, 2(1), 110–121.
  7. Casta, R. A., & Tanjung, J. (2025). Pengaruh transfer pricing, good corporate governance dan tax haven terhadap penghindaran pajak pada perusahaan multinasional. Jurnal Ilmiah Manajemen, Ekonomi, & Akuntansi (MEA), 9(1), 1947–1965.
  8. Chen, Y., Niu, F., & Zeng, T. (2025). Tax planning and earnings management: their impact on earnings persistence. Journal of Applied Accounting Research, 26(2), 412–432.
  9. Daito, A. (2023). Leverage, company size, and audit quality effect on tax avoidance in manufacturing companies listed on the Indonesia stock exchange and Malaysia exchange for the 2015-2019 period. Journal of Accounting and Finance Management, 3(6), 274–284.
  10. Delgado, F. J., Fernández-Rodríguez, E., García-Fernández, R., Landajo, M., & Martínez-Arias, A. (2023). Tax avoidance and earnings management: a neural network approach for the largest European economies. Financial Innovation, 9(1), 19.
  11. Eskandar, H., & Ebrahimi, P. (2020). Tax avoidance and institutional ownership: Active vs. passive ownership. International Journal of Finance & Managerial Accounting, 5(17), 95–106.
  12. Fadilah, A., & Ambarita, D. (2024). Pengaruh pertumbuhan penjualan, leverage dan transfer pricing terhadap tax avoidance. Jurnal Akuntansi Keuangan Dan Bisnis, 2(2), 366–371.
  13. Fahmi, M. (2024). The effect of leverage, thin capitalization, and tax havens on tax avoidance with firm size as a moderating variable. Jurnal Akuntansi Dan Auditing, 21(2), 176–199.
  14. Farid, F., Rahim, S., & Sari, R. (2025). Pengaruh thin capitalization dan transfer pricing terhadap penghindaran pajak dengan pemafaatan tax haven country sebagai variabel moderating. Economics and Digital Business Review, 6(2), 676–691.
  15. Ghofar, A. (2023). Foreign ownership dan earnings management pada perbankan ASEAN. Akuntansi: Jurnal Akuntansi Integratif, 9(2), 137–156.
  16. Haris, I., Hizazi, A., & Gowon, M. (2025). The effect of leverage, corporate social responsibility (CSR), institutional ownership and company size on tax avoidance. Formosa Journal of Multidisciplinary Research, 4(2), 863–880.
  17. Irawan, F., Kinanti, A., & Suhendra, M. (2020). The impact of transfer pricing and earning management on tax avoidance. Talent Development & Excellence, 12(3), 3203–3216.
  18. Juwita, R. P. N., & Sari, T. D. R. (2025). The effect of company size, profitability, leverage and audit quality on tax avoidance of manufacturing companies listed on the Indonesia Stock Exchange in 2019-2023. International Journal of Environmental, Sustainability, and Social Science, 6(2), 350–360.
  19. Kalbuana, N., Taqi, M., Uzliawati, L., & Ramdhani, D. (2023). CEO narcissism, corporate governance, financial distress, and company size on corporate tax avoidance. Cogent Business & Management, 10(1), 2167550.
  20. Khuong, N. V., Liem, N. T., Thu, P. A., & Khanh, T. H. T. (2020). Does corporate tax avoidance explain firm performance? Evidence from an emerging economy. Cogent Business & Management, 7(1), 1780101.
  21. Kramarova, K. (2021). Transfer pricing and controlled transactions in connection with earnings management and tax avoidance. SHS Web of Conferences, 92, 02031.
  22. Kumar, S., Pandey, N., Lim, W. M., Chatterjee, A. N., & Pandey, N. (2021). What do we know about transfer pricing? Insights from bibliometric analysis. Journal of Business Research, 134, 275–287.
  23. Lubis, I. F., Siregar, E., Saribu, A. D., Pasaribu, J. P. B., Sianipar, Y. S., Rajagukguk, L. F., & Simbolon, A. M. (2025). Pengaruh sistem penetapan harga transfer terhadap potensi penghindaran pajak dalam perusahaan multinasional. Economics and Digital Business Review, 6(2), 1602–1611.
  24. MacCarthy, J. (2021). Effect of earnings management and deferred tax on tax avoidance: Evidence using modified Jones model algorithm. Corporate Ownership and Control, 19(1), 272–287.
  25. Mardjono, E. S. (2024). Gender diversity of executive, internal control, institutional ownership, firm size and tax avoidance: an interactive effects business strategy. Jurnal Akuntansi Universitas Jember, 22(1), 80–95.
  26. Mardjono, E. S., Hernawati, R. I., Septriana, I., & Nehayati, N. (2024). Transfer pricing, earnings management, and ESG: Strategies for sustainable corporate reporting. Penerbit NEM.
  27. Meckling, W. H., & Jensen, M. C. (1976). Theory of the firm. Managerial Behavior, Agency Costs and Ownership Structure, 3(4), 305–360.
  28. Mukarramah, M., & Nugroho, L. (2025). The effect of transfer pricing, earning management, csr and firm size in tax avoidance. Research Horizon, 5(2), 71–82.
  29. Mukin, A. U., & Oktari, Y. (2019). Effect of Company Size, Profitability, and Leverage on Tax Avoidance. ECo-Fin, 1(2), 63–75.
  30. Nalarreason, K. M., & Prameswari, N. P. A. S. (2025). Do independent commissioners restrain earning management and tax avoidance? Jurnal Akuntansi, 17(1), 96–111.
  31. Nathania, C., Wijaya, S., Hutagalung, G., & Simorangkir, E. N. (2021). The influence of company size and leverage on tax avoidance with profitability as intervening variable at mining company listed in indonesia stock exchange period 2016-2018. International Journal of Business, Economics and Law, 24(2), 132–140.
  32. Novrica, F., Tarmidi, D., & Herliansyah, Y. (2024). Analysis of board of directors gender diversity in the impact of corporate governance on earnings management. Research Horizon, 4(5), 11–22.
  33. Nugrahanto, A., & Gramatika, E. (2022). Kepemilikan manajerial dan kepemilikan asing dalam memoderasi pengaruh penghindaran pajak terhadap nilai perusahaan. Jurnal Informasi, Perpajakan, Akuntansi, Dan Keuangan Publik, 17(2), 173–194.
  34. Nugroho, D. W., Sunarsih, U., & Zulfiati, L. (2023). the influence of transfer pricing, leverage, profitability, and earnings management on tax avoidance moderated by institutional ownership (an empirical study of manufacturing companies). Jurnal Pamator: Jurnal Ilmiah Universitas Trunojoyo, 16(4), 835–848.
  35. Nurlis, N., Indriawati, F., & Meiliyah, A. (2021). Effect of earning management and corporate social responsibility disclosure on tax avoidance with firm size as a moderating variable, survey on manufacturing companies listed on the indonesia stock exchange. International Journal of Management Studies and Social Science Research, 3(3), 95–103.
  36. Olanisebe, M., Abdullahi, S., & Dandago, K. (2023). Managerial ownership and tax avoidance of listed companies in Nigeria with profitability as mediating variable. FUDMA Journal of Accounting and Finance Research [FUJAFR], 1(1), 1–26.
  37. Parmananda, R. S., & Maryanti, E. (2024). Kualitas laba: menjelajahi ekuitas yang dinilai terlalu tinggi, manajemen laba, dan volatilitas arus kas. Intelektualitas Jurnal Penelitian Lintas Keilmuan, 1(2), 1–23.
  38. Phillips, R., Petersen, H., & Palan, R. (2021). Group subsidiaries, tax minimization and offshore financial centres: Mapping organizational structures to establish the ‘in-betweener’advantage. Journal of International Business Policy, 4(2), 286–307.
  39. Prihastiwi, W. (2023). The effect of thin capitalization, institutional ownership and managerial ownership on tax avoidance in automotive companies on the Indonesia Stock Exchange. Journal of World Conference (JWC), 5(2), 70–76.
  40. Purba, R., & Edward, Y. R. (2021). The effect of transfer pricing, foreign ownership on tax avoidance with corporate social responsibility (CSR) as a moderated variables. International Journal of Business, Economics and Law, 24(6), 151–159.
  41. Rahmayani, M. W., Hernita, N., & Riyadi, W. (2023). Company size and profitability against tax avoidance in coal sector mining companies listed on the IDX in 2018-2021. International Journal of Professional Business Review: Int. J. Prof. Bus. Rev., 8(8), 59.
  42. Ratih, S. K., & Fitria, A. (2024a). Pengaruh profitabilitas, kepemilikan manajerial, dan transfer pricing terhadap tax avoidance. Jurnal Ilmu Dan Riset Akuntansi (JIRA), 13(2).
  43. Ratih, S. K., & Fitria, A. (2024b). Pengaruh profitabilitas, kepemilikan manajerial, dan transfer pricing terhadap tax avoidance. Jurnal Ilmu Dan Riset Akuntansi (JIRA), 13(2).
  44. Rizki, M., & Nugroho, L. (2024). How institusional and manajerial ownership, transfer pricing and company size affect tax avoidance? Economic and Business Horizon, 3(2), 71–83.
  45. Rizqi, R. M., Akbar, A. Z., & Fahlia, F. (2025). Ukuran perusahaan sebagai variabel moderasi: dampak profitabilitas dan pertumbuhan penjualan terhadap agresivitas pajak. Ultimaccounting Jurnal Ilmu Akuntansi, 17(1), 39–57.
  46. Sadjiarto, A., Ringoman, J. A., & Angela, L. (2024). The effects of earning management and environmental, social, governance (ESG) on tax avoidance with leverage as a moderating variable. International Journal of Organizational Behavior and Policy, 3(1), 63–74.
  47. Sánchez‐Ballesta, J. P., & Yagüe, J. (2021). Financial reporting incentives, earnings management, and tax avoidance in SMEs. Journal of Business Finance & Accounting, 48(7–8), 1404–1433.
  48. Sari, D., Wardani, R. K., & Lestari, D. F. (2021). The effect of leverage, profitability and company size on tax avoidance (an empirical study on mining sector companies listed on Indonesia Stock Exchange Period 2013-2019). Turkish Journal of Computer and Mathematics Education, 12(4), 860–868.
  49. Sari, R. H. D. P., & Ajengtiyas, A. (2021). Pengaruh profitabilitas, transfer pricing, dan manajemen laba terhadap tax avoidance. Konferensi Riset Nasional Ekonomi Manajemen Dan Akuntansi, 2(1), 898–917.
  50. Sari, S. Y., & Chairunisa, M. (2025). Pengaruh transfer pricing dan profitabilitas terhadap tax avoidance dengan kepemilikan institusional sebagai moderasi (studi empiris pada perusahaan pertambangan terdaftar di bursa efek Indonesia periode 2021–2023). Baitul Maal: Journal of Sharia Economics, 2(1), 49–67.
  51. Sarpingah, S. (2020). The effect of company size and profitability on tax avoidance with leverage as intervening variables. EPRA International Journal of Research & Development (IJRD), 5(10), 81–93.
  52. Siburian, M. E. (2023). Can firm size moderate a company’s tax avoidance in retail trading? Accounting & Finance/Oblìk ì Fìnansi, 102(4).
  53. Sofiamanan, N. Z., & Machmuddah, Z. (2023). Profitability, capital intensity, and company size against tax avoidance with leverage as an intervening variable. Journal of Applied Accounting and Taxation, 8(1), 21–29.
  54. Tang, T. Y. H. (2020). A review of tax avoidance in China. China Journal of Accounting Research, 13(4), 327–338.
  55. Tanko, U. M., Waziri, S. L., & Yusuf, A. (2022). Firm attributes and tax avoidance of Nigerian oil and gas firms: moderating role of managerial ownership. Journal of Accounting Research, Organization and Economics, 5(1), 44–57.
  56. Utama, F., & Oktris, L. (2025). Incentives, institutional ownership, and profitability on tax avoidance, moderated by audit quality. Jurnal Locus Penelitian Dan Pengabdian, 4(7).
  57. Velte, P. (2024). Ownership structure and corporate tax avoidance: a structured literature review on archival research. Journal of Applied Accounting Research, 25(3), 696–731.
  58. Wongsinhirun, N., Chatjuthamard, P., Chintrakarn, P., & Jiraporn, P. (2024). Tax avoidance, managerial ownership, and agency conflicts. Finance Research Letters, 61, 104937.
  59. Yahaya, O. A. (2025). Ownership structure and tax avoidance. Available at SSRN 5228041.
  60. Yino, D. (2025). Transfer pricing, capital intensity dan leverage diproyeksikan mampu mempengaruhi tax avoidance. Jurnal Ekonomi, 30(1), 130–152.
  61. Yoshida, D. (2023). The effect of transfer pricing, thin capitalization and foreign ownership on tax avoidance. International Journal of Management Studies and Social Science Research, 5(05), 213–219.
  62. Zhao, Q., & Wang, W. (2025). Tax digitization and earnings management. International Review of Economics & Finance, 104077.