Determinants of Tax Avoidance in Infrastructure Companies: The Role of Capital Intensity, Profitability, Foreign Ownership and Leverage (Methosika Jurnal Akuntansi dan Keuangan Methodist)

Summary

• The study examines 19 infrastructure companies listed on the Indonesia Stock Exchange during 2020–2024.p.1
• The original dataset had 95 firm-year observations, while the earlier pooled regression used 75 after excluding 20 records.p.1
• In the preliminary regression, capital intensity, profitability and leverage had negative coefficients on the Cash Effective Tax Rate, while foreign ownership had a positive coefficient.p.1
• The earlier OLS model recorded an adjusted R² of 0.772 at N = 75, which the authors do not treat as robust.p.13
• The authors call the findings provisional and say the study does not establish causal tax-avoidance behavior.p.1

Key insights

1. Because CETR is an inverse proxy for tax avoidance, negative coefficients point toward higher inferred tax avoidance and positive ones toward lower.p.1
2. The 20 excluded observations cannot be identified because no company-year IDs were kept, so the 75-observation sample cannot be called a complete panel of 19 companies.p.6
3. Foreign ownership in the sample ranged from a minimum of 0.00 to a maximum of 0.85.p.8
4. The old regression gave leverage a coefficient of -0.014 on CETR, in line with higher inferred tax avoidance.p.14
5. The standardized Beta for leverage of -0.901 is very large and needs further checking before it can be considered robust.p.14
6. Profitability and CETR both depend on profit, so their relationship may arise mechanically rather than from tax decisions.p.11
7. Construction firms subject to final income tax should be separated from the others in the final revision.p.15