Effect of sales growth, capital intensity and debt to equity ratio on tax avoidance as moderated by firm size
Peter Winarta, Matondang Elsa Siburian, Enda Noviyanti Simorangkir & Wilsa Road Betterment Sitepu
Abstract
This study aims to analyze the effect of sales growth, capital intensity, and debt to equity ratio on tax avoidance with firm size as a moderating variable. This quantitative research focused on seventeen food and beverage manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2018 to 2022. Data were analysed using Structural Equation Modelling with a Partial Least Square approach. The findings revealed that sales growth and debt to equity ratio do not significantly impact tax avoidance, while capital intensity does. Additionally, firm size does not moderate the relationship between sales growth or debt to equity ratio and tax avoidance but strengthens the effect of capital intensity on tax avoidance. These results offer valuable insights for financial management within the sector, highlighting the importance of strategic asset management in reducing tax burdens. The study’s findings suggest that regulators may need to refine tax policies to address the nuanced effects of capital investment on tax avoidance behaviors, especially in large firms.
Keywords
sales growth, capital intensity, debt to equity ratio, tax avoidance
Author information & Contribution
Peter Winarta. Corresponding author. Student at Department of Accounting, Faculty of Business & Economics, Universitas Prima Indonesia, Medan, North Sumatra, Indonesia.Email : peter.winarta99@gmail.com.
Matondang Elsa Siburian. Lecturer of Department of Accounting, Faculty of Business & Economics, Universitas Prima Indonesia, Medan, North Sumatra, Indonesia.Email: matondangelsasiburian@unprimdn.ac.id.
Enda Noviyanti Simorangkir. Lecturer of Department of Accounting, Faculty of Business & Economics, Universitas Prima Indonesia, Medan, North Sumatra, Indonesia.Email: endanoviyantisimorangkir@unprimdn.ac.id.
Wilsa Road Betterment Sitepu. Lecturer of Department of Accounting, Faculty of Business & Economics, Universitas Prima Indonesia, Medan, North Sumatra, Indonesia.Email: wilsasitepu@unprimdn.ac.id.
“All authors equally contributed to the conception, design, preparation, data gathering and analysis, and writing of the manuscript. All authors read and approved the final manuscript.”
Disclosure statement
No potential conflict of interest was reported by the author(s).
Funding
This work was not supported by any funding.
Institutional Review Board Statement
AI Declaration
Notes
Acknowledgement
References
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Cite this article:
Winarta, P., Siburian, M.E., Simorangkir, E.N. & Sitepu, W.R.B. (2024). Effect of sales growth, capital intensity and debt to equity ratio on tax avoidance as moderated by firm size. International Journal of Academe and Industry Research, 5(4), 1-22. https://doi.org/10.53378/ijair.353108
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