Governance Structure, Tax Avoidance, and Firm Value

This study aims to determine the effect of good corporate governance with board size indicators, board diversity, independent commissioners, and audit committee on the firm value. Tax avoidance was also tested as mediation in Good Corporate Governance and firm value relationship. We used 132 publicly listed Indonesian manufacturing firms that are listed in 2014-2018 as samples. This study used multiple regression analysis and path analysis by a Sobel test. The study results indicated that the size of independent commissioners played a significant role in supervising and providing consultation that had an impact on increasing firm value and tax avoidance. Meanwhile, other Good Corporate Governance elements, including board size, board diversity, and audit committee, did not affect the firm value. Similarly, the role of tax avoidance as mediation couldn’t be proven in this study. This indicated that the regulators need to evaluate the mechanism to implement Good Corporate Governance in public firms and, if deemed necessary, provide additional Good Corporate Governance mechanism which principles can be applied entirely to prevent an agency conflict.