Do Owners Matter? The Impact of Institutional, Managerial, Foreign, and Family Ownership on Tax Avoidance in Indonesia

Rika Nur Widiastutik; Ratu Aghnia Raffaidy; Nur Rizki Wijaya; Ika Swasti Putri

doi:10.55927/eajmr.v4i8.165

Authors

Rika Nur Widiastutik Universitas Negeri Surabaya
Ratu Aghnia Raffaidy Universitas Negeri Surabaya
Nur Rizki Wijaya Universitas Negeri Surabaya
Ika Swasti Putri Universitas Negeri Surabaya

DOI:

https://doi.org/10.55927/eajmr.v4i8.165

Keywords:

Family, Foreign, Institutional, Managerial, Tax Avoidance

Abstract

This study explores the impact of ownership structure on tax avoidance in manufacturing companies listed on the Indonesia Stock Exchange from 2020 to 2024. The research examines four types of ownership—family, institutional, managerial, and foreign—using purposive sampling. A regression analysis was applied to assess the relationship between ownership structures and tax avoidance, measured by effective tax rates (ETR). A quantitative approach is employed, utilizing secondary data collected from annual reports and financial statements. The findings show that family, institutional, and foreign ownership negatively influence tax avoidance, while managerial ownership has no significant effect. This research provides insights into how ownership types influence tax behavior in an emerging market like Indonesia.

References

Athira, A., & Ramesh, V. (2024). Economic policy uncertainty and tax avoidance: International evidence. Emerging Markets Review. https://doi.org/10.1016/j.ememar.2024.101135

Benkraiem, R., Gaaya, S., & Lakhal, F. (2024). Tax avoidance, investor protection, and investment inefficiency: An international evidence. Research in International Business and Finance, 69, 102258. https://doi.org/https://doi.org/10.1016/j.ribaf.2024.102258

Benkraiem, R., Lakhal, F., & Slama, A. (2024). How does the heterogeneity of institutional investors influence corporate tax avoidance? The moderating role of family ownership. International Journal of Managerial Finance. https://doi.org/10.1108/ijmf-11-2022-0501

Chalevas, C. G., Doukakis, L. C., Karampinis, N. I., & Pavlopoulou, O.-C. (2024). The impact of family ownership on tax avoidance: International evidence. International Review of Financial Analysis, 94, 103317. https://doi.org/https://doi.org/10.1016/j.irfa.2024.103317

Chen, S., Chen, X., Cheng, Q., & Shevlin, T. (2010). Are family firms more tax aggressive than non-family firms? Journal of Financial Economics, 95(1), 41–61. https://doi.org/10.1016/j.jfineco.2009.02.003

Claessens, S., Djankov, S., & Xu, L. C. (2000). The separation of ownership and control in East Asian Corporations. Journal of Financial Economics, 15 (1)(February), 23–46.

Dakhli, A. (2021). The impact of ownership structure on corporate tax avoidance with corporate social responsibility as mediating variable. Journal of Financial Crime. https://doi.org/10.1108/jfc-07-2021-0152

Dakhli, A. (2022). The impact of ownership structure on corporate tax avoidance with corporate social responsibility as mediating variable. Journal of Financial Crime, 29(3), 836–852.

DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160.

Dyreng, S. D., Hanlon, M., & Maydew, E. L. (2008). Long-run corporate tax avoidance. Accounting Review, 83(1), 61 – 82. https://doi.org/10.2308/accr.2008.83.1.61

Effendi, S., & Prima, A. P. (2023). Analysis of The Influence of Institutional Ownership, Managerial Ownership, and Ownership Structure on Company Financial Performance: Case Study of Manufacturing Companies In Indonesia. Global Financial Accounting Journal. https://doi.org/10.37253/gfa.v7i2.8596

Fan, J., Gu, Q., & Yu, X. (2022). Collectivist Cultures and the Emergence of Family Firms. The Journal of Law and Economics, 65. https://doi.org/10.1086/718853

Feng, C., Ye, Y., & Bai, C. (2023). Tax enforcement and corporate financial irregularities: Evidence from China. International Review of Financial Analysis. https://doi.org/10.1016/j.irfa.2023.102697

Grehenson, G. (2025). Penerimaan Pajak Rendah, Akademisi UGM Dorong Peningkatan Kepatuhan Wajib Pajak dan Windfall Tax. Ugm.Ac.Id. https://ugm.ac.id/id/berita/penerimaan-pajak-rendah-ekonom-ugm-dorong-peningkatan-kepatuhan-wajib-pajak-dan-windfall-tax/#:~:text=Laporan terbaru Bank Dunia mengungkapkan,internasional yang merekomendasikan minimal 15%25.

Guan, J. X., Li, O. Z., & Jiameng. (2018). Managerial Ability and the Shareholder Tax Sensitivity of Dividends. Journal of Financial and Quantitative Analysis, 53, 335–364. https://doi.org/10.1017/S0022109017001004

Gunarto, N. A., & Adi, P. H. (2023). Who Avoids More? A Cross-country Evidence of Economic Policy Uncertainty and Tax Avoidance. International Journal of Social Science and Business. https://doi.org/10.23887/ijssb.v7i3.54746

Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50(2–3), 127–178.

Horodnic, I. (2018). Tax morale and institutional theory: a systematic review. International Journal of Sociology and Social Policy. https://doi.org/10.1108/IJSSP-03-2018-0039

Jensen, M. C., & Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305–360. https://doi.org/https://doi.org/10.1016/0304-405X(76)90026

Kadek, I., & Suryatna, D. (2023). The Effect of Institutional Ownership, Sales Growth, Firm Size on Tax Avoidance with Corporate Social Responsibility as a Moderating Variable. International Journal of Social Science and Business. https://doi.org/10.23887/ijssb.v7i3.55757

Kałdoński, M., & Jewartowski, T. (2024). Tax aggressiveness under concentrated ownership: The importance of long-term institutional investors. Finance Research Letters. https://doi.org/10.1016/j.frl.2024.105541

Khelil, I., & Khlif, H. (2022). Tax avoidance in family firms: a literature review. Journal of Financial Crime. https://doi.org/10.1108/jfc-03-2022-0064

Kovermann, J., & Velte, P. (2019). The impact of corporate governance on corporate tax avoidance—A literature review. Journal of International Accounting, Auditing and Taxation, 36, 100270.

Kuo, C.-S. (2022). Family firms, tax avoidance, and socioemotional wealth: evidence from tax reform in Taiwan. Review of Quantitative Finance and Accounting, 58, 1535–1572. https://doi.org/10.1007/s11156-021-01029-5

Kuo, J.-S., Ho, Y.-C., & Lin, H.-S. (2020). Institutional ownership and tax avoidance: Evidence from regression discontinuity. Academia Economic Papers, 48(1), 105 – 149. https://www.scopus.com/inward/record.uri?eid=2-s2.0-85083296464&partnerID=40&md5=f890458e465b721ecaf5987e0626bac5

Marques, C. B. (2022). Tax Avoidance And Tax Evasion. Revista Gênero e Interdisciplinaridade. https://doi.org/10.51249/gei.v3i01.641

Niandari, N., Yustrianthe, R. H., & Grediani, E. (2020). Kepemilikan Manajerial dan Praktik Penghindaran Pajak: Studi pada Perusahaan Manufaktur terdaftar di BEI Periode Tahun 2015-2017. Owner: Riset Dan Jurnal Akuntansi, 4(2), 459–466.

Sánchez-Ballesta, J., & Yagüe, J. (2024). Does tax avoidance affect productivity in SMEs? Management Decision. https://doi.org/10.1108/md-07-2023-1159

Suranta, E., Midiastuty, P. P., & Hasibuan, H. R. (2020). The effect of foreign ownership structure and foreign commissioners’ board of tax avoidance. Journal of Economics, Business, and Accountancy | Ventura, 22, 309–318. https://doi.org/10.14414/jebav.v22i3.2143

Syukur, M., & Jongsureyapart, C. (2023). The influence of foreign ownership on tax avoidance in Thailand: A study from an emerging economy. Journal of Tax Reform, 9, 98–109. https://doi.org/10.15826/jtr.2023.9.1.131

Tarmidi, D., Alfia, Y. D., & Umar, H. (2022). Analyzing Owner’s Role in Influencing Corporate Tax Policy. Humanities and Social Sciences Letters. https://doi.org/10.18488/73.v10i4.3107

Thomsen, M., & Watrin, C. (2018). Tax avoidance over time: A comparison of European and U.S. firms. Journal of International Accounting, Auditing and Taxation. https://doi.org/10.1016/J.INTACCAUDTAX.2018.11.002

Velte, P. (2023). Ownership structure and corporate tax avoidance: a structured literature review on archival research. Journal of Applied Accounting Research. https://doi.org/10.1108/jaar-10-2022-0259

Wang, K., & Sun, A. (2022). Institutional ownership stability and corporate social performance. Finance Research Letters. https://doi.org/10.1016/j.frl.2022.102861

Widiastutik, R. N., Iqbal, S., & Rusydi, M. K. (2024). Moderating Role of ESG Disclosure on Minority Shareholders and Tax Avoidance. Journal of Accounting Research, Organization and Economics, 7(2), 237–252.

Wongsinhirun, N., Chatjuthamard, P., Chintrakarn, P., & Jiraporn, P. (2024). Tax avoidance, managerial ownership, and agency conflicts. Finance Research Letters, 61, 104937.