The role of corporate governance in emerging market: Tax avoidance, corporate social responsibility disclosures, risk disclosures, and investment efficiency

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Abstract

This study aims to examine the effect of tax avoidance, corporate social responsibility disclosures, and risk disclosures on investment efficiency. This study also examines the role of corporate governance in the association between tax avoidance, corporate social responsibility disclosures, risk disclosures, and investment efficiency. This study uses multiple linear regression with panel data. The sample uses 43 manufacturing companies listed on the Indonesian Securities Exchange from 2014 up to 2017 so that the total sample in this study amounted to 172 firm-years. The result suggests that tax avoidance is negatively associated with investment efficiency. However, corporate social responsibility disclosures and risk disclosures do not affect investment efficiency. Furthermore, another result suggests that corporate governance failed to moderate the effect of tax avoidance on investment efficiency. Besides, corporate governance can weaken the negative influence of corporate social responsibility disclosures on investment efficiency as well as corporate governance drives the negative effect of risk disclosures on investment efficiency.

Keywords: Corporate Governance, Disclosures, Risk, Social Responsibility, Tax Avoidance

Authors’ individual contribution: Conceptualization – A.F. and G.A.T.; Methodology – A.F. and G.A.T.; Formal Analysis – G.A.T.; Investigation – A.F. and G.A.T.; Writing – Original Draft – G.A.T.; Writing – Review & Editing – A.F.; Supervision – A.F.

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

JEL Classification: M41, G31, G32, G38, H26

Received: 29.03.2020
Accepted: 20.07.2020
Published online: 22.07.2020

How to cite this paper: Firmansyah, A., & Triastie, G. A. (2020). The role of corporate governance in emerging market: Tax avoidance, corporate social responsibility disclosures, risk disclosures, and investment efficiency. Journal of Governance & Regulation, 9(3), 8-26. https://doi.org/10.22495/jgrv9i3art1