Int. J. of Trade and Global Markets   »   2014 Vol.7, No.3



Title: Tax avoidance behaviour towards the cost of debt


Authors: Indah Masri; Dwi Martani


Faculty of Economic Pancasila University, Jakarta, Indonesia
Accounting Department, University of Indonesia, Depok, Indonesia


Abstract: The aim of the research is to analyse tax avoidance behaviour to cost of debt (COD) moderated by tax rate changes and family ownership structure. The research used the sample manufacturing firms in Indonesia Stock Exchange for the period 2008-2010. The study finds that tax avoidance has positive influence on COD. Tax avoidance creates a risk thereby increasing the COD. In the period before tax rate reduction, the influence of tax avoidance on COD is smaller compared with the period after tax reduction; this indicates the presence of earning management conducted by the company before tax rate reduction. Family ownership structure causes greater influence over tax avoidance on COD; this shows that family ownership increases tax aggressive behaviour. The results of this research are contrary with the research conducted by Lim (2011), which shows negative relationship between tax avoidance and the COD.


Keywords: tax avoidance; cost of debt; tax rates; tax rate changes; family ownership; manufacturing industry; Indonesia; earnings management.


DOI: 10.1504/IJTGM.2014.064911


Int. J. of Trade and Global Markets, 2014 Vol.7, No.3, pp.235 - 249


Available online: 22 Sep 2014



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