PENGARUH MANAJEMEN LABA DAN TRANSFER PRICING TERHADAP TAX AVOIDANCE DIMODERASI DENGAN KEPEMILIKAN INSTITUSIONAL

Abstract

This study aims to investigate the impact of earnings management and transfer pricing on tax avoidance, with institutional ownership as a moderating variable. The research uses secondary data from 97 manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2018-2020 period, selected through purposive sampling. The data analysis was carried out using moderating regression analysis with an absolute difference approach, utilizing the SPSS 25 application. The findings reveal that earnings management significantly positively affects tax avoidance, as managers intervene in reported profits to minimize tax payments. Similarly, transfer pricing practices also have a significant positive effect on tax avoidance, where managers leverage inter-company relationships to shift profits and reduce tax burdens. Despite these findings, institutional ownership does not moderate the relationship between earnings management or transfer pricing and tax avoidance. This lack of moderating effect may be attributed to information asymmetry, where management possesses more knowledge about internal conditions than institutional investors. Moreover, the low percentage of institutional ownership may result in weak control over corporate tax strategies like transfer pricing, limiting institutional shareholders' influence in reducing tax avoidance practices.