The Effect of Institutional Ownership, Profitability, Leverage and Capital Intensity Ratio on Tax Avoidance

ABSTRACT : State revenue from the tax sector has an important role in financing state expenditures. Thegovernment is trying to optimize tax revenue, but the tax revenue target has not been achieved due to taxavoidance actions. This study measures tax avoidance with the effective tax rate (ETR) value. This study aims toobtain empirical evidence of the effect of institutional ownership, profitability, leverage and capital intensityratio on tax avoidance. This research was conducted at mining sector companies listed on the Indonesia StockExchange in 2015-2019. The number of samples was determined using purposive sampling technique with atotal of 45 samples. Data were analyzed using multiple linear regression analysis. The results of this studyindicate that institutional ownership has a negative effect on tax avoidance, profitability and the capital intensityratio have a positive effect on tax avoidance, while leverage has no effect on tax avoidance. The results of thisstudy can theoretically confirm Agency Theory which explains that there are differences in interests between thegovernment (principal) and companies or taxpayers (agents), as well as confirm the Positive Accounting Theorywhich explains that the accounting methods used by companies are to minimize their political costs.

Keywords :tax avoidance, financial performance, GCG