Profitability, Firm Value, and Tax Aggressiveness With Corporate Governance as Moderation

Abstract

Purpose: This study aims to examine the effect of profitability and firm value on tax aggressiveness with corporate governance as a moderating variable.

Method: This study uses quantitative methods with a sample of manufacturing companies listed on the stock exchanges of ASEAN countries for the period 2018-2023. The sample consists of 633 companies determined using purposive sampling based on data from published annual reports. Data analysis was carried out using a panel data regression model with the Fixed Effect Model selected as the best model.

Finding: The results showed that profitability and firm value have a positive effect on tax aggressiveness; companies with high value tend to be more aggressive to improve shareholder welfare. Corporate governance is proven to weaken the relationship between profitability and tax aggressiveness, indicating that good governance reduces managers' tendency for aggressive tax actions. However, corporate governance is unable to moderate the effect of firm value on tax aggressiveness, likely due to limitations in supervisory mechanisms regarding strategic decisions for increasing firm value.

Novelty: This study contributes to the literature by expanding the sample coverage to a regional level (ASEAN companies) rather than a single country, and by specifically adding corporate governance as a moderating variable to understand its role in mitigating tax aggressiveness.