Indonesian Journal of Law and Economics Review
Vol 19 No 4 (2024): November
Tax Accounting

The Impact of Tax Planning on Earnings Management in Manufacturing Firms
Dampak Perencanaan Pajak terhadap Manajemen Laba pada Perusahaan Manufaktur


  • Asmaul Qusna,
  • Heri Widodo*
Asmaul Qusna
Universitas Muhammadiyah Sidoarjo, Indonesia
Heri Widodo
Universitas Muhammadiyah Sidoarjo, Indonesia *

(*) Corresponding Author
DOI: https://doi.org/10.21070/ijler.v19i4.1162
Published October 1, 2024
Keywords
  • tax planning,
  • earnings management,
  • firm value,
  • manufacturing companies,
  • Indonesia Stock Exchange
How to Cite
Qusna, A., & Widodo, H. (2024). The Impact of Tax Planning on Earnings Management in Manufacturing Firms. Indonesian Journal of Law and Economics Review, 19(4), 10.21070/ijler.v19i4.1162. https://doi.org/10.21070/ijler.v19i4.1162

Copyright (c) 2024 Asmaul Qusna, Heri Widodo

Creative Commons License

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

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Abstract

General Background: Tax planning is a legal strategy employed by taxpayers to minimize their tax liabilities through effective utilization of existing tax laws, ultimately enhancing taxation efficiency. Specific Background: Tax planning's direct impact on earnings management in manufacturing firms, especially in emerging markets like Indonesia, is still underexplored despite its importance. Knowledge Gap: Previous studies have primarily examined the correlation between tax planning and financial performance, neglecting the moderating influence of firm value. Aims: The study examines the influence of tax planning on earnings management in manufacturing companies listed on the Indonesia Stock Exchange from 2017-2020, considering firm value as a moderating factor. Results: Utilizing a quantitative, associative research methodology and secondary data from IDX, the analysis revealed that tax planning significantly affects earnings management (significance level: 0.008), confirming the first hypothesis. Furthermore, the findings indicate that firm value positively moderates the relationship between tax planning and earnings management (significance level: 0.000), thus supporting the second hypothesis. Novelty: This study bridges the gap between tax planning, earnings management, and the moderating effects of firm value in a developing economy. Implications: The study highlights the importance of strategic tax planning for manufacturing firms to improve earnings management, emphasizing the need for firm value consideration in tax-related decision-making.

Highlights:

 

  1. Tax planning significantly impacts earnings management in manufacturing firms.
  2. Firm value moderates the relationship between tax planning and earnings management.
  3. Utilizes quantitative research with secondary data from IDX website.

 

Keywords: tax planning, earnings management, firm value, manufacturing companies, Indonesia Stock Exchange

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