Companies should prioritize information transparency

Oct 13, 2025 by talynt.org 88 views

The Effect of Tax Avoidance on Company Value and Cost of Debt with Information Transparency as a Moderation Variable in Plantation Companies Registered in the IDX Period 2011-2015

Introduction

Tax avoidance is a common practice in the business world, where companies aim to minimize their tax obligations by exploiting loopholes in the tax code. While tax avoidance can be seen as a negative practice, it can also be viewed as a positive strategy for company resource management. However, the impact of tax avoidance on company value and cost of debt is a complex issue that requires careful analysis. This study aims to investigate the effect of tax avoidance on company value and cost of debt with information transparency as a moderation variable in plantation companies registered in the IDX period 2011-2015.

Methodology

This study uses a purposive sampling method to select 35 plantation companies from the IDX period 2011-2015. The variables tested in this study include tax avoidance measured using Cash Effective Tax Rate (Cash ETR), company value calculated using Tobins'Q, debt costs, and transparency of information measured through the voluntary disclosure index. Multiple linear regression analysis was conducted using the SPSS version 19 program to analyze the relationship between variables.

Results

The results of this study show that simultaneously, factors such as tax avoidance, information transparency, company size, and leverage have no significant influence on company value. However, in the analysis of Cost of Debt, the results obtained show that the value of F count is greater than F table, indicating that simultaneously, these factors have a significant influence on the cost of debt. When analyzed partially, tax avoidance does not show a significant effect on company value, but it has proven to be partially influential on debt costs.

Discussion

Tax avoidance is often seen negatively, but it can also be viewed as a positive strategy for company resource management. Companies that carry out tax avoidance can reduce tax obligations and allocate more funds for investment and other operational activities, increasing the competitiveness of the company. However, the influence of tax avoidance on company value is not always linear. Investors may consider the tax avoidance strategy as risk, which can reduce the value of the company in the public. This impairment can occur if investors consider the company not to be transparent in its tax practice, which can damage the reputation and trust of consumers.

Information transparency plays an important role in managing this risk. Companies that have a high level of transparency can build trust in the eyes of stakeholders, including investors and consumers. This shows that information transparency can be a strong moderation variable, changing how the tax avoidance strategy is perceived by the market.

On the other hand, the positive influence of tax avoidance on debt costs shows that companies capable of managing tax obligations properly tend to have lower debt costs. This may be caused by an increase in cash flow obtained due to tax savings, which subsequently provides flexibility for companies in fulfilling their debt obligations.

Conclusion

This study provides important insights for company managers on how tax management and information transparency can affect company performance in the market. While tax avoidance has an insignificant influence on overall company value, the effect on debt costs gives an illustration that the right tax strategy remains important for the company's financial health. Companies should consider the importance of information transparency in managing the risk associated with tax avoidance and strive to maintain a high level of transparency in their tax practices.

Recommendations

Based on the findings of this study, the following recommendations are made:

Companies should prioritize information transparency: Companies should strive to maintain a high level of transparency in their tax practices to build trust with stakeholders and manage the risk associated with tax avoidance.
Tax management should be a key focus: Companies should consider the importance of tax management and strive to minimize their tax obligations through legitimate means.
Debt costs should be a key consideration: Companies should consider the impact of tax avoidance on debt costs and strive to maintain a low debt cost by managing their tax obligations properly.

Limitations

This study has several limitations, including:

Sample size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
Data availability: The data used in this study is limited to the IDX period 2011-2015, which may not reflect the current market conditions.
Measurement error: The measurement of tax avoidance and information transparency may be subject to measurement error, which may affect the accuracy of the findings.

Future Research Directions

Future research should aim to:

Investigate the impact of tax avoidance on company value and cost of debt in other industries: This study focuses on plantation companies, and future research should investigate the impact of tax avoidance on company value and cost of debt in other industries.
Examine the role of information transparency in managing the risk associated with tax avoidance: This study highlights the importance of information transparency in managing the risk associated with tax avoidance, and future research should examine the role of information transparency in more detail.
Investigate the impact of tax avoidance on debt costs in other contexts: This study shows that tax avoidance has a positive influence on debt costs, and future research should investigate the impact of tax avoidance on debt costs in other contexts.
Q&A: The Effect of Tax Avoidance on Company Value and Cost of Debt with Information Transparency as a Moderation Variable

Q: What is tax avoidance, and how does it affect company value and cost of debt?

A: Tax avoidance is a common practice in the business world, where companies aim to minimize their tax obligations by exploiting loopholes in the tax code. While tax avoidance can be seen as a negative practice, it can also be viewed as a positive strategy for company resource management. However, the impact of tax avoidance on company value and cost of debt is a complex issue that requires careful analysis.

Q: What are the key findings of this study?

A: The study found that simultaneously, factors such as tax avoidance, information transparency, company size, and leverage have no significant influence on company value. However, in the analysis of Cost of Debt, the results obtained show that the value of F count is greater than F table, indicating that simultaneously, these factors have a significant influence on the cost of debt. When analyzed partially, tax avoidance does not show a significant effect on company value, but it has proven to be partially influential on debt costs.

Q: What is the role of information transparency in managing the risk associated with tax avoidance?

A: Information transparency plays an important role in managing the risk associated with tax avoidance. Companies that have a high level of transparency can build trust in the eyes of stakeholders, including investors and consumers. This shows that information transparency can be a strong moderation variable, changing how the tax avoidance strategy is perceived by the market.

Q: How can companies manage the risk associated with tax avoidance?

A: Companies can manage the risk associated with tax avoidance by prioritizing information transparency. This means that companies should strive to maintain a high level of transparency in their tax practices to build trust with stakeholders and manage the risk associated with tax avoidance.

Q: What are the implications of this study for company managers?

A: This study provides important insights for company managers on how tax management and information transparency can affect company performance in the market. While tax avoidance has an insignificant influence on overall company value, the effect on debt costs gives an illustration that the right tax strategy remains important for the company's financial health.

Q: What are the limitations of this study?

A: This study has several limitations, including:

Sample size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
Data availability: The data used in this study is limited to the IDX period 2011-2015, which may not reflect the current market conditions.
Measurement error: The measurement of tax avoidance and information transparency may be subject to measurement error, which may affect the accuracy of the findings.

Q: What are the future research directions for this study?

A: Future research should aim to:

Investigate the impact of tax avoidance on company value and cost of debt in other industries: This study focuses on plantation companies, and future research should investigate the impact of tax avoidance on company value and cost of debt in other industries.
Examine the role of information transparency in managing the risk associated with tax avoidance: This study highlights the importance of information transparency in managing the risk associated with tax avoidance, and future research should examine the role of information transparency in more detail.
Investigate the impact of tax avoidance on debt costs in other contexts: This study shows that tax avoidance has a positive influence on debt costs, and future research should investigate the impact of tax avoidance on debt costs in other contexts.

Q: What are the practical implications of this study for policymakers?

A: This study highlights the importance of information transparency in managing the risk associated with tax avoidance. Policymakers should consider the importance of information transparency in tax policies and regulations to ensure that companies are transparent in their tax practices.

Q: What are the implications of this study for investors?

A: This study provides important insights for investors on how tax management and information transparency can affect company performance in the market. Investors should consider the importance of information transparency in tax practices when making investment decisions.

Q: What are the implications of this study for consumers?

A: This study highlights the importance of information transparency in managing the risk associated with tax avoidance. Consumers should consider the importance of information transparency in tax practices when making purchasing decisions.