The Effect of Ownership and Audit Commitee Characteristics on Tax Avoidance

Abstract

tax avoidance is generally regarded as an unacceptable act. Because it has always been the object of prolonged and often resolved to the level of the court. Definition of tax avoidance itself is legally tax avoidance efforts that do not violate tax laws that do taxpayers by way of trying to reduce the amount of taxes payable by seeking regulatory weaknesses. Previous research in this subject ignore the role of internal corporate governance mechanism, such as Ownership and Board Commitee. Therefore, this purpose of this research to obtain empirical evidence of tax avoidance in the trade and service sector companies listed on the Indonesia Stock Exchange. The theory used in this research is the theory of agency. Agency theory is a relationship or contractual principal and agent. The final sample in this study were 31 companies with a total 105 observations. Characteristics of ownership is measured by three variables: managerial ownership, institutional ownership and family ownership. Beside, the audit committee is measured by three variables as well: the size of the audit committee, the independence of the audit committee, and the background of the financial expertise of audit committees. This study also uses four control variables: return on assets (ROA), leverage (LEV), company size (CS), and  company age (CA). This study  used a multiple linear regression. The results showed that managerial ownership, institutional ownership, family ownership, the size of the audit committee, the independence of the audit committee, and audit committee expertise background do not affect the tax avoidance. Only one control variables has a significant efffect on the Tax avoidance: return on assets. This finding imply that the phenomena of tax avoidance could not be explained by Agency theory in dynamic business enviroments, such as Indonesia.

Keywords: Tax Avoidance, Ownership and Audit Committeecharacteristics.