The analysis of the characteristics of external auditor and audit committees: Tax avoidance

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Abstract

Companies have an obligation to pay taxes to the state. Tax revenues require supervision to prevent tax avoidance activities. Regulatory gaps governing the tax system and aggressive tax strategies are used by the company to minimize payment of tax costs. The monitoring mechanism to minimize tax avoidance is carried out by auditors. The research objective is to test and provide empirical evidence regarding the characteristic factors of external auditors and the existence of an audit committee that influences tax avoidance. This study uses a quantitative approach. Research data was taken using a purposive sampling technique. The research object is an energy company listed on the Indonesia Stock Exchange, IDX (Bursa Efek Indonesia, BEI) with the observation year 2012–2021. The analysis technique uses classical assumption tests, multiple linear regression, and hypotheses testing. The research results show that the length of the audit engagement has a negative influence on tax avoidance. Audit opinions, audit fees, and audit committees have no effect on tax avoidance. The conclusion of this research emphasizes the importance of supervision to control and minimize the negative impact of tax avoidance practices.

Keywords: Characteristics of External Auditors, Audit Opinion, Audit Committee, Tax Avoidance, Corporation

Authors’ individual contribution: Conceptualization — P.P. and E.J.S.S.; Methodology — P.P.; Validation — P.P.; Formal Analysis — E.J.S.S. and A.A.; Investigation — P.P. and A.A.; Data Curation — P.P.; Writing — Original Draft — P.P. and E.J.S.S.; Writing — Review & Editing — P.P. and A.A.; Supervision — P.P.; Project Administration — A.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G39, H26, K34, M40

Received: 04.11.2023
Accepted: 19.04.2024
Published online: 24.04.2024

How to cite this paper: Payamta, P., Sulistio, E. J. S., & Ardianingsih, A. (2024). The analysis of the characteristics of external auditor and audit committees: Tax avoidance. Risk Governance and Control: Financial Markets & Institutions, 14(2), 8–14. https://doi.org/10.22495/rgcv14i2p1