Scientific Papers

JOURNAL OF INTERNATIONAL STUDIES


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ISSN: 2306-3483 (Online), 2071-8330 (Print)

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Political connection and tax aggressiveness: A study on the state-owned enterprises registered in Indonesia stock exchange

Vol. 12, No 1, 2019

 

Pipit Iswari

 

Department of Accounting, Faculty of Economics and Business, Universitas Sebelas Maret

Indonesia

pipitiswari@student.uns.ac.id

Political connection and tax aggressiveness: A study on the state-owned enterprises registered in Indonesia stock exchange

Eko Arief Sudaryono

 

Department of Accounting, Faculty of Economics and Business, Universitas Sebelas Maret

Indonesia

ekoarif_fe@staff.uns.ac.id


Wahyu Widarjo

 

Department of Accounting, Faculty of Economics and Business, Universitas Sebelas Maret

Indonesia

widarjo@staff.uns.ac.id


 

 

 

 

 

 

Abstract. This study aims to analyze the effect of political connection in the board of directors and board of commissioners on tax aggressiveness in the State-Owned Enterprises listed in Indonesia Stock Exchange. The analysis results show that the political connection between the board of directors and the board of commissioners negatively affects tax aggressiveness. It indicates that state-owned enterprises tend to avert tax aggressiveness. The state-owned enterprises which have political connection incline toward the compliance with the prevailing taxation regulation to enhance their image as obedient taxpayers. Although there is a political connection established with the government and parliament, the board of directors and board of commissioners do not take it into their own advantages regarding taxation. That indicates how state-owned enterprises tend to uphold government’s work plan in relation with tax revenue. Furthermore, the finding of this research signals the effectiveness of monitoring by the independent commissioner in order to synchronize the interest of the board of directors and the board of commissioner in terms of taxation for the long-term objectives of the company.

 

 

Received: August, 2018

1st Revision: October, 2018

Accepted: February, 2019

 

DOI: 10.14254/2071-8330.2019/12-1/5

 

JEL ClassificationH26, M41, M48

KeywordsPolitical connection, tax aggressiveness, a state-owned enterprise, Indonesia, panel regression analysis