University of Twente Student Theses


Ownership structure and tax avoidance : an empirical analysis of listed Indonesian mining companies

Hohmann, M. (2021) Ownership structure and tax avoidance : an empirical analysis of listed Indonesian mining companies.

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Abstract:Indonesia's mining industry substantially contributes to the nation's GDP, revenue, export and employment. However, the country experiences illicit financial flows partly caused by tax avoidance of mining firms, leading to less available funds for other investments. Tax avoidance does not occur without the knowledge of specific firm parties, such as controlling owners. The thesis therefore empirically investigates the impact of ownership structure on tax avoidance of listed Indonesian mining firms. The unit of analysis is 34 mining firms listed in the Indonesian stock exchange (IDX) from 2004 to 2018. Since tax avoidance cannot be measured directly, this thesis uses cash effective tax rate, effective tax rate and profit before tax as proxies for tax avoidance. The independent variables are the following ownership types: family, state, domestic corporate, domestic institutional, and foreign. Regression results, explaining the variation in tax avoidance between firms and between years, show that ownership type has a significant effect on the proxies regarding tax avoidance. By this, this thesis finds that ownership types domestic institutional and foreign positively influence tax avoidance, while family, state and domestic corporate ownership show a negative effect. Ownership structure is shown to be an important tax-avoidance contributing factor. These findings could benefit government policies aiming to reduce illicit financial flows and to improve the social welfare with tax revenue, especially in emerging countries such as Indonesia.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:02 science and culture in general, 10 humanities in general, 43 environmental science, 57 mining engineering, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
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