The Effect of Corporate Governance Mechanisms on Effective Tax Rate: An Empirical Study of Industrial Sector Companies Listed on the Indonesia Stock Exchange for the 2020–2024 Period

Salsa Vonni Indrayani; Wiralestari; Ilham Wahyudi; Enggar Diah Puspa Arum

doi:10.59890/ijma.v4i2.387

Authors

Salsa Vonni Indrayani Universitas Jambi
Wiralestari Universitas Jambi
Ilham Wahyudi Universitas Jambi
Enggar Diah Puspa Arum Universitas Jambi

DOI:

https://doi.org/10.59890/ijma.v4i2.387

Keywords:

Corporate Governance,Tax Avoidance, Effective Tax Rate, Audit Committee, Independent Commissioners, Institutional Ownership.

Abstract

Listed businesses in the industrial sector on the Indonesia Stock Exchange for the years 2020–2024 will have their ETR examined in this research. This study takes a quantitative approach by drawing on secondary sources and a purposeful sampling strategy; the end result is a 65-observation sample consisting of 13 different organizations. After running the data through the Chow and Hausman tests, which are part of panel data regression in EViews, the results show that the FEM is the most appropriate model to apply. While institutional ownership does have a positive and substantial influence on the ETR, the data demonstrate that the audit committee and independent commissioners do not. At the same time, the ETR is significantly affected by each of the corporate governance factors. Consistent with agency theory, these results show that external monitoring systems are superior in limiting opportunistic management conduct.

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