COSTING:Journal of Economic, Business and Accounting

Volume 7 Nomor 3, Tahun 2024

e-ISSN : 2597-5234

THE EFFECT OF INSTITUSIONAL OWNERSHIP, MANAGERIAL

OWNERSHIP, PROFITABILITY AND AUDIT QUALITY ON TAX AGRESSIVITY

PENGARUH KEPEMILIKAN INSTITUSIONAL, KEPEMILIKAN

MANAJERIAL, PROFITABILITAS DAN KUALITAS AUDIT TERHADAP
AGRESIVITAS PAJAK

Muhammad Zaid Al Fikri1*, Herlin Tundjung Setijaningsih2

Accounting Departement, School of Accounting - Master of Accounting, Universitas Bina
Nusantara1,2
[email protected]

ABSTRACT
The purpose of this study is to analyze the causality relationship, which explains the independent variables
consisting of institutional ownership, managerial ownership, profitability and audit quality against the
dependent variable of tax aggressiveness. The data analysis of this research is quantitative analysis and
uses Eviews software. EViews is software used for statistical analysis and econometrics. EViews allows
users to process data, test hypotheses, and create statistical models for data analysis. EViews methods
include the use of time series and cross-sectional data to perform regression analysis, multivariate analysis,
causality testing, and data stationary testing. EViews can also be used to design, test, and estimate
econometric models such as linear regression models, autoregressive models, and mobile autoregressive
models. The results of this study show that the pattern of data that has been collected and the results of
testing that has been carried out using Eviews 12 with the panel data regression analysis method show that
first, institutional ownership has a negative and significant effect on tax aggressiveness. Second,
managerial ownership has a significant negative effect on tax aggressiveness. Third, profitability has a
significantly positive effect on tax aggressiveness. Fourth, audit quality has a significant negative effect on
tax aggressiveness.
Keywords: institutional ownership, managerial ownership, profitability and quality checks on tax
aggressiveness

ABSTRAK
Tujuan dari penelitian ini adalah untuk menganalisis hubungan kausalitas, yang menjelaskan variabel
independen yang terdiri dari kepemilikan institusional, kepemilikan manajerial, profitabilitas dan kualitas
audit terhadap variabel dependen yaitu agresivitas pajak. Analisis data penelitian ini adalah analisis
kuantitatif dan menggunakan software Eviews. EViews merupakan software yang digunakan untuk analisis
statistik dan ekonometrika. EViews memungkinkan pengguna untuk mengolah data, menguji hipotesis, dan
membuat model statistik untuk analisis data. Metode EViews mencakup penggunaan data time series dan
cross-sectional untuk melakukan analisis regresi, analisis multivariat, pengujian kausalitas, dan pengujian
stasioneritas data. EViews juga dapat digunakan untuk merancang, menguji, dan mengestimasi model
ekonometrika seperti model regresi linier, model autoregressive, dan model mobile autoregressive. Hasil
dari penelitian ini menunjukkan bahwa pola data yang telah dikumpulkan dan hasil pengujian yang telah
dilakukan dengan menggunakan Eviews 12 dengan metode analisis regresi data panel menunjukkan bahwa
pertama, kepemilikan institusional berpengaruh negatif dan signifikan terhadap agresivitas pajak. Kedua,
kepemilikan manajerial berpengaruh negatif signifikan terhadap agresivitas pajak. Ketiga, profitabilitas
berpengaruh positif signifikan terhadap agresivitas pajak. Keempat, kualitas audit berpengaruh negatif
signifikan terhadap agresivitas pajak.
Kata Kunci: Kepemilikan Institusional, Kepemilikan Manajerial, Profitabilitas Dan Kualitas Pemeriksaan
Terhadap Agresivitas Pajak

INTRODUCTION role of taxes on state revenue is very

Indonesia is a country whose important, as evidenced by state revenue
income is very dependent on the tax which is completely dominated by the
sector, it can be said that taxes are the tax sector. Based on data reported by
country's main source of capital in DDTC.co.id, income in Indonesia is very
carrying out national development. The dependent on the tax sector, because

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taxes always have the most contribution located in Singapore to move the profits
each year (DDTC.co.id, 2020). Even so, it earns to countries that have low tax
on the tax realization side, it is known rates. From these actions PT. Adaro
that tax revenue from 2018-2020 always Energy Tbk can minimize the tax paid up
misses the target that has been set. Tax to US$ 125 million (Sugianto, 2019).
targets that are not achieved can be The next case was carried out by PT
caused by various factors, one of which Kaltim Prima Coal in 2007 which carried
is due to tax burden management actions out sales engineering. According to data
by the company. Based on data reported reported by tempo.co, the sale was
by PricewaterhouseCoopers (PwC) supposed to be carried out directly by PT
Indonesia, that only 30 percent of 40 Kaltim Prima Coal, but was transferred
large mining companies have adopted to PT Indocoal Resource Limited, which
tax transparency reporting in 2020 is a subsidiary of its corporate affiliate.
(Suwiknyo, 2021a). This is also in The sale of coal to this affiliated
accordance with data from the company is to make a low turnover of
Directorate General of Taxes (DGT) coal sales of PT. Kaltim Prima Coal, thus
presented in table 1. causing PT Kaltim Prima Coal's tax
Table 1. Percentage of Mining Tax burden to be lower (Wijaya, 2019).
Revenue in 2018-2021 (in billion The tax burden management
rupiah) carried out by PT Adaro Energy and PT
Year
Tax Tax
Difference Kaltim Prima Coal is more familiar with
Revenue Targets
2018 155.318,34 136.691,08 18.627,26
the term tax avoidance. According to
2019 123.308,12 139.152,77 (15.844,65) Supartini & Permana (2019), tax
2020 69.552,03 115.662,27 (46.110,24) avoidance is the practice of legally
2021 59.210,23 139.305,70 (80.095,47)
manipulating income that is still in
Source: Laporan Tahunan DJP, 2021 accordance with the provisions of tax
Based on the data above, it can be legislation to reduce the amount of tax
seen that tax revenue in the mining sector owed. Taxes are a burden that will
from 2018-2021 always decreases. In reduce profits, while one of the
addition, tax revenue in the mining company's goals is profit oriented. In
sector always misses the target that has accordance with the aim of optimizing
been set. Based on data from DGT's profits, both domestic and multinational
annual report, the mining sector is in the companies try to minimize the tax
fifth position of tax contributor sectors, burden by utilizing existing tax
and is preceded by the processing, trade, provisions.
financial and construction services and Factors that influence a company
real estate industries (DGT, 2021). This to take tax aggressiveness actions,
is also what motivates this study using including the implementation of
research samples from the mining sector. corporate governance. The National
Indonesia is one of the most productive Committee for Governance Policy
countries in the coal sector mining (KNKG) defines good corporate
industry in the world and is the fifth governance as an effort to motivate
largest coal producing country in the management to be able to increase
world (Suwiknyo, 2021b). success and control management
In addition, there are cases that can behavior in order to continue to heed the
strengthen the fact that the mining sector interests of stakeholders (Komite
manages the tax burden. According to Nasional Kebijakan Governance
news reported by finance.detik.com, PT (KNKG), 2015) Companies that have
Adaro Energy utilizes its subsidiary

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good corporate governance tend to take pajak. Hasil ini menunjukkan konsistensi
tax actions that are not risky and more dengan penelitian di Amerika Serikat
obedient to established regulations. dan Kanada yang menyatakan bahwa
(Jensen & Meckling, 2012), stated that kepemilikan institusional dapat
institutional ownership and managerial mempengaruhi agresivitas pajak.
ownership are two corporate governance According to Prasetyo & Pramuka
mechanisms that can control agency (2018), managerial ownership is the
issues, especially those related to level of share ownership of management
corporate tax decisions. who actively participate in decision
According to Hikmah & making, such as directors, management
Sulistyowati (2020), institutional and commissioners. Managerial
ownership is shared ownership by other ownership is one way to overcome
institutions, namely ownership by other agency conflicts, where it can align the
companies or institutions. A certain interests of managers both as agents and
percentage of shares owned by principals. With this, managers will also
institutions increases oversight and gives feel the benefits of the decisions taken
encouragement to companies to comply and bear losses as a consequence of
with tax regulations. In the supervisory making wrong decisions, one of which is
function, institutional investors are tax avoidance.
believed to have the ability to monitor Research conducted by (Amila &
management actions better than Suryadi, 2014) shows that managerial
individual investors. Institutional ownership has a significant positive
investors are classified as experienced influence on tax aggressiveness in
investors (sophisticated), so they will companies in the United States. The
supervise effectively and tend to be results of this study are supported by
skeptical of actions from management research by (Guay et al., 1996) which
(Putra et al., 2019). That way, shows that managerial ownership also
management will be careful in making positively affects tax aggressiveness in
decisions, especially related to corporate Canada. In Indonesia, research by
tax aggressiveness. (Kurniawan, 2018) shows that
Terdapat banyak penelitian yang managerial ownership has a positive
meneliti pengaruh kepemilikan influence on tax aggressiveness. These
institusional terhadap agresivitas pajak. results are consistent with research in the
Salah satu contohnya adalah penelitian United States and Canada that suggests
oleh (Hanlon & Heitzman, 2010) yang that managerial ownership can increase
menunjukkan bahwa kepemilikan tax aggressiveness.
institusional memiliki pengaruh negatif In addition to institutional
signifikan terhadap agresivitas pajak ownership and managerial ownership,
pada perusahaan-perusahaan di Amerika another factor capable of influencing tax
Serikat. Hasil penelitian ini didukung aggressiveness is profitability.
oleh penelitian oleh (Hanlon et al., 2012) Profitability is the ability of a company
yang menunjukkan bahwa kepemilikan to make a profit (Astuti, 2020). In this
institusional juga berpengaruh negatif study, researchers used ROA as a tool to
terhadap agresivitas pajak di Kanada. Di calculate profitability in the company.
Indonesia, penelitian oleh Return on assets (ROA) is one of the
(Puspitaningtyas, 2019) menunjukkan ratios of profitability that aims to
bahwa kepemilikan institusional measure the effectiveness of the
berpengaruh negatif terhadap agresivitas company in generating profits by

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utilizing its assets (Sumardi & quality has a negative and significant
Suharyono, 2020). The higher this ratio, effect on tax aggressiveness (Damayanti
the better the company's performance by & Susanto, 2016).
using assets to earn profits. The amount Research conducted by
of tax liability that must be paid by the (Mulawarman, 2020) found that there is
taxpayer is based on the gross profit tax avoidance behavior in the mining
generated, in measuring the potential sector in Indonesia. This study was
profit generated using the Return On conducted in the period 2017-2018.
Asset (ROA) ratio. Research by Pangaribu and Sukoharsono
Research conducted by (Triyanti et (2019) also shows that most coal mining
al., 2020), (Anggraeni & Oktaviani, companies listed on the Indonesia Stock
2021) states that there is a positive effect Exchange do tax avoidance by using
of Return On Asset (ROA) on tax transfer pricing. This study was
avoidance, this means stating that conducted in 2018. Research by
companies with a high Return On Asset (Rukmana, 2018) examines the factors
(ROA) ratio have the opportunity to that influence tax avoidance in mining
position themselves by planning taxes, companies in Indonesia. The study was
so as to reduce the amount of tax burden. conducted in 2017. Research by (Lusida
Another factor that is thought to et al., 2022) examines factors that
affect tax aggressiveness is the quality of influence tax non-compliance behavior
the audit. Audit quality is the in coal mining companies listed on the
accumulation and evaluation of evidence Indonesia Stock Exchange. This study
about information to determine and was conducted in 2020. Research by
report the level of correspondence (Kartikasari et al., 2020) also shows that
between the information and the there is tax non-compliance behavior in
established criteria (Maharani & Juliarto, the mining sector in Indonesia in 2019.
2019a). Audit quality is one way in This research was conducted in the
corporate governance to control the last five years, namely 2017-2021 on the
actions of managers and can prevent and Indonesia Stock Exchange (IDX) related
detect accounting manipulation. One to tax avoidance behavior in the mining
form of accounting manipulation is the sector because the IDX is an institution
act of tax avoidance. Companies that that facilitates securities trading in
have been monitored by high-quality Indonesia, including securities from
external audits, will reduce tax companies operating in the mining
avoidance activities. sector. Therefore, IDX is an important
Research conducted by (Gaaya et source of data for researchers to analyze
al., 2017) found that audit quality the behavior of companies in the sector,
negatively affects tax aggressiveness. especially in terms of tax avoidance. In
This is because auditors who have low addition, IDX also has strict rules and
ability and experience make it possible to mechanisms in terms of submitting
engage in tax avoidance. In a study financial statements by companies listed
conducted by (Maharani & Juliarto, on the stock exchange, so that the
2019) which found that auditors included available data is relatively reliable and
in the Big Four have a low association accurate. This allowed the researchers to
with tax avoidance, because they are conduct a more precise and valid
more concerned about reputational analysis of tax avoidance behavior in the
damage. Research conducted in mining sector in Indonesia. Therefore,
Indonesia itself has found that audit research conducted in the last five years

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on the IDX can make an important 2017-2021. 3) Companies that have

contribution to the development of tax institutional ownership and managerial
science and practice in Indonesia. ownership respectively during 2017–
Researchers took a time span in the 2021.
last five years, namely 2017-2021, This research is a type of
because according to the news reported quantitative research using secondary
by www.dataindustri.com the rise and data obtained from the financial
fall of prices was caused by two things, statements of coal mining industry
namely supply and demand. Coal supply companies listed on the Indonesia Stock
or production is strongly influenced by Exchange for the period 2017 to 2021.
weather factors, producer country The purpose of this study is to analyze
policies, production and shipping the causality relationship, which
factors. Meanwhile, demand or demand explains the independent variables
is influenced by the level of electrical consisting of institutional ownership,
energy demand in the buyer country, managerial ownership, profitability and
weather factors in the coal buyer audit quality against the dependent
country, buyer country policies, and variable of tax aggressiveness. The data
energy supply in the buyer country. analysis of this research is quantitative
Based on agency theory that analysis and uses Eviews software.
explains the relationship between agent EViews is software used for statistical
and principal, where in this context the analysis and econometrics. EViews
agent is positioned as company allows users to process data, test
management and the principal is hypotheses, and create statistical models
positioned as the government. The two for data analysis. EViews methods
entities have agency conflicts, due to include the use of time series and cross-
different perspectives in looking at taxes. sectional data to perform regression
In the eyes of tax management, it is a analysis, multivariate analysis, causality
burden that will reduce the company's testing, and data stationary testing.
profits, while according to the EViews can also be used to design, test,
government, taxes are the country's and estimate econometric models such as
largest source of revenue. With the linear regression models, autoregressive
background that has been described, the models, and mobile autoregressive
author is interested in conducting models (Gujarati, 2004).
research entitled "The Effect of
Institutional Ownership, Managerial RESULTS AND DISCUSSION
Ownership, Profitability and Audit Descriptive statistical analysis
Quality on Tax Aggressiveness”. provides an overview of data using the
average value (mean), maximum value,
RESEARCH METHODS minimum value and standard deviation
The population in this study is 17 (std.dev) of each variable in the study.
coal mining companies listed on the Here are the descriptive statistical
Indonesia Stock Exchange. The sample results.
used in this study is the purposive 1. The managerial ownership variable
sampling method, namely, 1) Coal shows a minimum value of 0.627694.
mining companies that have complete With a maximum value of 1.078953,
financial statements for the 2017-2021 the average value is 0.781084 and the
period. 2) Coal mining companies that standard deviation is 0.0.098401. The
have an Annual Report for the period higher the percentage proportion of

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institutional ownership, the greater making.

the influence of institutional 4. The profitability variable proxied
shareholders in the Company's with Return on Asset (ROA) has a
decision making. minimum value of 0.00, a maximum
Table 2. Statistical Descriptive Test value of 0.32, an average value of
Results 0.0904 and a standard deviation of
Mean
BTD
0.609111
INS
0.174132
MNJ
0.781084
ROA
27.4140
QTY
0.102011 0.08169. The greater the ROA value,
Median
Maximum
0.545988
1.600000
0.061757
0.900000
0.746368
1.078953
27.3619
27.8838
0.082125
0.312918
the more it illustrates that the
Minimum
Std. Dev.
0.240000
0.216691
0.004185
0.239244
0.627694
0.098401
27.2855 0.000562
0.139399 0.079742
company is able to maximize profits
Skewness
Kurtosis
1.626211
7.296874
2.010656
6.090161
1.449147
4.187403
1.578721
4.910775
0.654469
2.461924
from the assets owned.
Jarque-Bera 102.6371 85.73348 32.70011 45.40166 6.676139
Probability 0.000000 0.000000 0.000000 0.000000 0.000000 Model Specification Test Results
Sum 48.72888 13.93058 62.48674 2193.125 8.160873 The specification test aims to
Sum Sq. Dev. 3.709431 4.521766 0.764930 1.535137 0.502346
determine the panel data analysis model
Observations 80 80 80 80 80
to be used. The test used is the chow test
Source: Processed data, 2023 and then if needed can be continued with
From the results of descriptive the hausmann and lagrange tests.
statistical testing in table 2 above, it can
be explained as follows: Test Chow
1. In the variable tax aggressiveness The Chow test is used to choose
proxied with Book Tax Difference between a fixed effect model or a
(BTD) shows a minimum value of common effect model that should be
0.240000, a maximum value of used. So, the hypothesis used, namely:
1.600000, an average value of H0: Common Effect
0.609111 and a standard deviation of Hi: Fixed Effect
0.216691. Tax avoidance is indicated, If the probability result is less than
if the BTD value is getting closer to 0 0.05, then H0 is rejected. So, the selected
then it can be said that the company is model is Fixed Effect Method (FEM).
not too aggressive in tax avoidance, The results of estimation using fixed
and vice versa. specification effects are as follows:
2. The institutional ownership variable
shows a minimum value of 0.004185. Tabel 3. Hasil Uji Chow-Redundant
With a maximum value of 0.900000, Fixed Effect Tests
the average value is 0.174132 and the
standard deviation is 0.239244. The
higher the percentage proportion of
institutional ownership, the greater
the influence of institutional
Source: Processed Data, 2023
shareholders in corporate decision-
Based on the results above, it is
making.
known that the probability is 0.0017,
3. The managerial ownership variable
which means it is less than 0.05, so H0 is
shows a minimum value of 0.627694.
rejected. So, the model chosen is the
With a maximum value of 1.078953,
Fixed Effect Method (FEM). When the
the average value is 0.781084 and the
selected model is a fixed effect, it
standard deviation is 0.0.098401. The
continues with the Hausmann test.
higher the percentage proportion of
institutional ownership, the greater
the influence of institutional
shareholders in corporate decision-

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Hausman Test Based on the above results, it is known

The hausman test is used to that the Breusch-Pagan probability of
determine whether the Random Effect 0.0959 which means more than 0.05 then H1
Method (REM) model is better to use Accepted. So it can be concluded that the
than the Fixed Effect Method (FEM) model used in this study is the Common
model. So, the hypothesis used, namely: Effect Model (CEM).
H0: Random Effect
Hi: Fixed Effect Classical Assumption Test Results
If the probability result is more The classical assumption test in
than 0.05, then using the Random Effect this study was carried out using
Method (REM) model will be better. The normality test, multicollinearity test,
results of estimation using random heterokedasticity test, and
specification effects are as follows: autocorrelation test.

Table 4. Hausman Test Results – Normality Test

Correlated Random Effects Test The normality test aims to test
whether in a regression model, the
dependent variable and the independent
variable have a normal distribution or
not. Decision making using the
Source: Processed Data, 2023 JarqueBera Test or J-B Test. If the
Based on the results above, it is probability value > 0.05, then the
known that the probability of 0.5579 variables in the study have a normal
which means more than 0.05 then H0 distribution. The test results can be seen
Accepted. , it can be concluded that the in figure 1.
model that should be used is the Random
Effect Model (REM).

Lagrange Multiplier Test

The Lagrange Multiplier test is
used to determine whether the Random
Effect Method (REM) model is better
than the Common Effect Model (CEM)
model. So, the hypothesis used, namely:
H0: Random Effect
Hi: Common Effect
If the probability result is less than Figure 1. Normality Test Results
0.05, then using the Random Effect Source: Processed data, 2023
Method (REM) model will be better. The Based on the normality test using
results of estimation using random the Jarque Bera Test above, the
specification effects are as follows: probability of data in this study is
Table 5. Lagrange Multiplier Test 0.000032 which shows that the
Result probability < 0.05. These results can be
said that the variable data in this study is
not normally distributed. This is because
there are several outliers or distorted
data, so outlier detection is carried out, as
Source: Processed data, 2023 follows.

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Table 6. Detection Outlier Test Result of multicollinearity. In detecting

multicollinearing symptoms, this study
uses a correlation matrix between
independent variables, as follows.
Table 7. Multicolonicity Test Results
INS MNJ ROA QTY
IN
1.000000 0.11133928 0.23474281 -0.1416385
S
M
0.11133928 1.000000 0.06699463 -0.2858913
NJ
RO
0.23474281 0.06699463 1.000000 -0.03733118
A
QT
-0.1416385 -0.2858913 -0.0373118 1.000000
Source: Processed data, 2023 Y

Based on the outlier detection test, Source: Processed data, 2023

there are several outliers in this study, Based on the results in table 7, it
namely data numbers 3, 5, 7, 8, 27, 59 can be seen that all correlations between
and 71. Even so, the reviews 12 system independent variables, none of which
will adjust the regression model by have a value of more than 0.90. This
transforming data automatically to means that in this regression model there
normalize data distribution. are no symptoms of multicollinearity or
Furthermore, another normality test was in this model there is no correlation
carried out with Jarque Bera, the results between independent variables.
were as follows. However, if there is a multicollinearity
problem in this study can be ignored
because the multicollinearity problem
arises as a result of the effect of the
moderation variable, the
multicollinearity problem above cannot
be overcome because if overcome it will
remove the moderation variable, so that
Figure 2. Normality Test Results the multicollinearity problem in the
Source: Processed data, 2023 moderation variable above becomes a
Based on the normality test using limitation for this study (D. Gujarati,
the Jarque Bera Test above, the 2014).
probability data in this study is 0.735199
which shows that the probability > 0.05. Heteroscedasticity Test.
These results can be said that the variable The heteroscedasticity test aims to
data in this study is normally distributed. test whether in the regression model
there is an inequality of variance from
Multicollinearity Test the residual of one observation to another
This test is useful to find out (Sugiyono, 2015). The
whether the regression model found a heteroscedasticity test uses the Breusch
correlation between independent Pagan Godfrey test, as follows:
variables. A good model is one in which Table 8. Heterokedasticity Test
there is no correlation between Results
independent variables. According to
Hamid et al. (2020), if the correlation
coefficient between independent
variables > 0.90, it can be concluded that
the model has a multicollinearity
problem. In contrast, the correlation
coefficient < 0.90 hence the model is free Source: Processed data, 2023

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From the results of the Based on table 10 above, the

heteroscedasticity test analysis above, regression equation can be obtained as
the p value is indicated by the value of follows:
Prob. The chi square on Obs*R-Squared BTD = 11.152009266 -
is 0.2663. Since the p value is 0.2663 > 0.209233800989*INS -
0.05, then accepting H0 means that the 0.771360939944*MNJ +
regression model has no problem 0.658894247923*ROA -
assuming heteroscedasticity. 0.36372503273*QTY
Information:
The Automobile TD = Aggressiveness Pajak
The autocorrelation test aims to (Book Tax Difference)
test whether in one regression model NS = Institutional Ownership.
there is a correlation between NJ = Managerial Ownership.
confounding errors in the current period OA = Profitability (Return On
(t) with errors in the previous period (t- Asset)
1) (Ghozali, 2016). A good regression TY = Audit Quality.
model is one that is free from Based on the regression results that
autocorrelation. To detect the presence can be interpreted the relationship
or absence of autocorrelation this study between independent and dependent
used the Breusch-Godfrey test, as variables, both partially and
follows: simultaneously, the following
Table 9. Autocorrelation Test explanation:
BTD = 11.152009266 -
0.209233800989*INS -
0.771360939944*MNJ +
Source: Processed data, 2023 0.658894247923*ROA -
From the results of the analysis, it 0.36372503273*QTY
can be seen that the Probability Chi C = 11.152009266 That is, if there is no
Square value, which is the p value of change in institutional ownership,
managerial ownership, profitability and
the Breusch-Godfrey test, is 0.2388 audit quality included in the independent
where > 0.05 so that it accepts H0 or variable then the value of 11.152009266
as a constant value for the dependent
which means there is no serial variable.
INS = -0.209233800989 That is, any increase in
autocorrelation problem. institutional ownership will affect the
decrease in tax aggressiveness by
0.209233800989.
Panel Data Regression Test Results MNJ = -0.771360939944 That is, any increase in
managerial ownership will affect the
Table 10. Panel Data Regression Test decrease in tax aggressiveness by
0.771360939944.
Result Common Effect Model (CEM) ROA = 0.658894247923 That is, any increase in
profitability will affect the increase in tax
aggressiveness by 0.658894247923.
QTY = -0.36372503273 That is, any increase in
audit quality will affect the decrease in tax
aggressiveness by 0.36372503273.

Discussion
Table 11. Testing of Regression
Testing Results
Variable Coefficient Std. Error t-Statistic Prob Conclusion Influence on tax
aggressiveness
C 11.1520 4,644869 2,400931 0,0188

Source: Processed data, 2023 INS -0,20923 0,096605 -2,16586 0,0335 H1 Diterima Negative and
partially significant
effect
MNJ -0,77136 0,236430 -3,26254 0,0017 H2 Diterima Negative and
partially significant
effect

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ROA 0,65889 0,286809 2,297326 0,0244 H3 Diterima Negative and

partially significant
effect
results of research conducted by
QTY -0,36373 0,167397 -2,17283 0,0330 H4 Diterima Negative and
partially significant
(Sunanti et al., 2020) stated that
effect
institutional ownership negatively
The Effect of Institutional Ownership affects tax aggressiveness. However,
this is not in line with research
on Tax Aggressiveness
Based on the results of the conducted by (Fadhilah, 2014) which
found that institutional ownership has no
hypothesis test on the coefficient table, it
shows that the institutional ownership effect on tax aggressiveness.
variable has a significance level smaller
than 0.05, which is 0.000. A positive The Effect of Managerial Ownership
on Tax Aggressiveness
notation on the value of the coefficient
indicated by institutional ownership Based on the results of the
hypothesis test on the coefficient table, it
indicates that there is a negative
influence of institutional ownership on shows that the managerial ownership
variable has a significance level smaller
tax aggressiveness. This can be
interpreted as if the variable of than 0.05, which is 0.011. A negative
notation on the value of the coefficient
institutional ownership increases, the
value of tax aggressiveness will indicated by managerial ownership
indicates that there is a negative
increase. This means that this study
supports the third hypothesis (H1) or influence of managerial ownership on
tax aggressiveness. This can be
it can be stated that there is a negative
influence of institutional ownership on interpreted as, if the variable of
managerial ownership increases, the
tax aggressiveness.
The negative influence of value of tax aggressiveness will
decrease. This means that this study
institutional ownership on tax
aggressiveness means that higher supports the second hypothesis (H2) or
it can be stated that there is a negative
institutional ownership decreases tax
aggressiveness. In agency theory, influence of managerial ownership on
tax aggressiveness.
institutional ownership is considered as
one of the corporate governance In other words, with the increase in
the number of managerial holdings the
mechanisms that carry out effective
monitoring of management. Institutional tendency to engage in tax avoidance will
be lower. This is because giving share
ownership is able to discipline and
influence managers, thus forcing ownership to managerial ranks will align
the company's goals. That way the
management to avoid opportunistic
behavior. Opportunistic actions taken by manager will consider every decision for
the sake of the continuity of the
management are one of minimizing the
tax burden by all means to maximize company. This makes managers reduce
high-risk actions such as tax avoidance.
profits. It can be argued that the higher
proportion of institutional ownership In agency theory, this is a form of agency
conflict. The agency problem occurs
will strengthen oversight of
management, thereby reducing tax because of the information asymmetry
between the principal and agent.
aggressiveness.
The results of this study are in line These agency problems can harm
the principal who is not directly
with research conducted by (Khurana et
al., 2013; Krisna, 2019) which concludes involved in managing the company so
that the principal only has limited access
that institutional ownership negatively
affects tax aggressiveness. Likewise, the to information. One of the efforts to

5957
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reduce or minimize these conflicts is by large. This means that profitability is a

implementing good corporate determining factor against high and low
governance. Granting share ownership tax avoidance. The relationship of
to managerial ranks as an effort to align profitability to the theory of agency in
company goals, where managers have tax avoidance is that tax is a mandatory
the same interests as principals. contribution to an individual or entity
The results of this study are also in (company) (agent) deposited to the state
line with research conducted by Noorica (principal). The results of this study can
& Asalam (2021), Nur & Subardjo illustrate that companies do not want to
(2020) and Sari et al. (2022), which sacrifice part of the profits earned to be
stated that there is a negative influence given to the state in the form of taxes.
of managerial ownership on tax Therefore, the agent (company
aggressiveness. A high concentration of management) makes efforts to minimize
managerial ownership will make tax payments.
management in decision making more The results of this study are in
careful. This is because management as line with research conducted by
well as shareholders will also experience Triyanti et al., (2020), Anggraeni &;
losses as well. Likewise, in making Oktaviani (2021) and Putri (2018)
decisions to do tax avoidance that is stating that there is a positive
considered too high risk. So, with the influence of Return on Asset (ROA)
greater the managerial ownership in the on tax aggressiveness. This means
company, the lower the corporate tax stating that companies with a high
avoidance will be. Return on Asset (ROA) ratio have the
opportunity to position themselves by
The effect of profitability on tax planning taxes, so as to reduce the
aggressiveness amount of tax burden. Companies
Based on the results of the with good tax planning will get
hypothesis test in the coefficient table, it optimal profits, so the company's
shows that the variable Return on Asset tendency to do tax avoidance will
(ROA) has a significance level smaller increase.
than 0.05, which is 0.000. A positive
notation on the value of the coefficient The Effect of Audit Quality on Tax
indicated by Return on Asset (ROA) Aggressiveness
indicates that there is a positive effect of Based on the results of the
Return on Asset (ROA) on tax hypothesis test on the coefficient table, it
aggressiveness. This can be interpreted, shows that the audit quality variable has
if the variable Return on Asset (ROA) a significance level smaller than 0.05,
increases, the value of tax which is 0.000. A positive notation on
aggressiveness will increase. This means the value of the coefficient indicated by
that this study supports the third audit quality indicates that there is a
hypothesis (H3) or it can be stated that negative influence of audit quality on tax
there is a positive effect of Return on aggressiveness. This can be interpreted
Assets (ROA) on tax aggressiveness. as if the audit quality variable increases,
Higher company profitability can the value of tax aggressiveness will
cause companies to carry out careful tax increase. This means that this study
planning so as to produce optimal taxes. supports the third hypothesis (H4) or
Companies that are able to make large it can be stated that there is a negative
profits tend to want the taxes paid not too

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effect of audit quality on tax aggressiveness. Second, managerial

aggressiveness. ownership has a significant negative
The negative effect of audit quality effect on tax aggressiveness. Third,
on tax aggressiveness means that higher profitability has a significantly positive
audit quality reduces tax aggressiveness. effect on tax aggressiveness. Fourth,
Audit quality proxied by professional audit quality has a significant negative
fees, illustrates that the high cost of effect on tax aggressiveness
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