Tax Avoidance and Investment Efficiency: Can Competition in Product Markets Mediate?

Widuri, Retnaningtyas and NAOMI, VANESSA and BUMULO, LOVENA CICILIA and WIJAYA, JONATHAN BIMA (2020) Tax Avoidance and Investment Efficiency: Can Competition in Product Markets Mediate? [UNSPECIFIED]

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Abstract

This study examines the relationship between tax avoidance and investment efficiency, mediated by product market competition in Indonesian public listed companies. The existence of tax avoidance also depends on how the company�s managers make investment decisions. If managers can utilize tax avoidance properly, investment efficiency will increase. The increasing investment in a company is also influenced by competition in the market through product market competition. Indirectly, this competition makes the company take some investments that will support the company�s development to survive through the competition. Investment by companies on their product development would ensure the product�s adequacy to compete in market competition. A product that competes well in the market would also naturally raise the company�s investment efficiency. The result depends on the manager�s decision based on their market demands; the investment could still be either efficient or inefficient. The Indonesia�s public non-financial companies (Tbk companies) listed in Indonesia Stock Exchange from 2014 to 2018 were used as the samples of the study. The data were processed by the SPSS and Warp PLS program. Research results indicate that there is a positive relationship between tax avoidance and investment inefficiency.

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