Indonesian Journal of Law and Economics Review
Vol 19 No 3 (2024): August
Tax Accounting

Tax strategies drive earnings management in Indonesia
Strategi pajak mendorong manajemen laba di Indonesia


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  • Muhamad Fahmi Alfadin,
  • Herman Ernandi*
Muhamad Fahmi Alfadin
Program Studi Akuntansi, Universitas Muhammadiyah Sidoarjo, Indonesia, Indonesia
Herman Ernandi
Universitas Muhammadiyah Sidoarjo, Indonesia *

(*) Corresponding Author
Picture in here are illustration from public domain image or provided by the author, as part of their works
DOI: https://doi.org/10.21070/ijler.v19i3.1126
Published June 24, 2024
Keywords
  • Earnings management,
  • tax planning,
  • deferred tax expense,
  • tax rates,
  • Indonesian Stock Exchange
How to Cite
Alfadin, M. F., & Ernandi, H. (2024). Tax strategies drive earnings management in Indonesia. Indonesian Journal of Law and Economics Review, 19(3), 10.21070/ijler.v19i3.1126. https://doi.org/10.21070/ijler.v19i3.1126

Copyright (c) 2024 Muhamad Fahmi Alfadin, Herman Ernandi

Creative Commons License

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

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Abstract

This study investigates the direct and indirect effects of tax planning and deferred tax expense on earnings management, using tax rates as a moderating variable, among LQ45 index companies on the Indonesian Stock Exchange (BEI) from 2017-2019. Using a quantitative descriptive method and Smart PLS 3 software for analysis, the study found that tax planning significantly influences earnings management, while deferred tax expense does not. Tax rates moderate the impact of tax planning but not deferred tax expense on earnings management. These results emphasize the role of tax planning in earnings management and suggest that tax rates should be considered in regulatory policies. Future research should explore additional variables like company age and size.

 

Highlight: 

  • Tax planning significantly influences earnings management.
  • Tax rates moderate tax planning's effect on earnings management.
  • Deferred tax expense has no direct impact on earnings management.

 

 

Keyword:  Earnings management, tax planning, deferred tax expense, tax rates, Indonesian Stock Exchange

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