Corporate Financial Ratios and the Financial Reporting-Tax Trade-Off

Toly, Agus Arianto and MARIA, MACHIKO GIOVANNI and FANGIE, GLORIA (2023) Corporate Financial Ratios and the Financial Reporting-Tax Trade-Off. [UNSPECIFIED]

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Abstract

The research aims to determine the trade-off between the aggressiveness of financial reporting and taxation faced by management. By taking a sample of 230 company observations on the Indonesia Stock Exchange (BEI) for the 2019-2021 period using a purposive sampling method, this study analyzes the influence of five financial variables on the trade-off between financial reporting aggressiveness and taxation, including debt ratio, debt maturity, financing deficit., internal and external capital market funding ratios, and profitability. The analysis used is multiple linear regression. The research results show that the level of debt ratios, long-term debt and financing deficits have a positive influence on the aggressiveness of financial reporting, while the funding ratio in the external capital market and profitability have a significant negative influence. This study provides guidance to auditors to carefully examine a companys financial statements to ensure compliance with accounting standards and fairness.

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