Tax Aggressiveness in Energy Sector Companies: Does Institutional Ownership Influence Earnings Management and Liquidity?

Suratno Suratno; Set Asmapane; Agus Setiawaty

doi:10.55980/ebasr.v5i2.391

Authors

Suratno Suratno Department of Accounting, Mulawarman University, Samarinda, Indonesia
Set Asmapane Department of Accounting, Mulawarman University, Samarinda, Indonesia
Agus Setiawaty Department of Accounting, Mulawarman University, Samarinda, Indonesia

DOI:

https://doi.org/10.55980/ebasr.v5i2.391

Keywords:

Earnings Management, Liquidity, Tax Aggressiveness, Institutional Ownership

Abstract

This research aims to examine the effects of earnings management and liquidity on tax aggressiveness, with institutional ownership as a moderating variable. The study focuses on energy sector companies, where tax aggressiveness remains particularly relevant due to the sector’s substantial economic contribution and exposure to tax-planning practices. This research uses secondary data, with a population consisting of all energy sector companies listed on the Indonesia Stock Exchange from 2020 to 2024. The research sample was selected using purposive sampling, resulting in 24 energy sector companies and 120 firm-year observations. This research employs a quantitative approach and moderated multiple regression analysis to test the proposed relationships. The results show that earnings management has a positive and significant effect on tax aggressiveness, indicating that higher levels of earnings management are associated with more aggressive tax practices. Furthermore, liquidity, measured using the current ratio, has a positive and significant effect on tax aggressiveness, suggesting that greater financial flexibility may facilitate aggressive tax-planning strategies. Institutional ownership weakens the relationship between earnings management and tax aggressiveness, indicating its effective monitoring role in constraining opportunistic managerial behavior. However, institutional ownership does not weaken the relationship between liquidity and tax aggressiveness. These findings contribute to the tax aggressiveness literature by demonstrating that institutional monitoring effectiveness depends on the underlying managerial and financial conditions associated with aggressive tax decisions.

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