JURNAL

Riset Akuntansi dan Keuangan Indonesia

URL : http://journals.ums.ac.id/index.php/reaksi/index

The Effect of Enviromental Uncertainty and

Tax Avoidance: The Role Managerial Ability

ABSTRACT
Taxes play an essential role in state funding. As something
that is not profitable for the company, it usually encourages
Hanny Purnomo*, Rizky Eriandani
efforts to reduce taxes by doing a tax avoidance. This study
Accounting, Faculty of Business and aims to determine the effect of environmental uncertainty
Economic, University of Surabaya on tax avoidance and to determine the managerial ability
*email: hannyprnm@staff.ubaya. to weaken the effect of environmental uncertainty on tax
ac.id avoidance. Using SPSS, 458 samples used in this study are
Keywords: manufacturing companies listed on the Indonesia Stock
Environmental Uncertainty; Tax Exchange in the period 2016 – 2020. The results of this
avoidance; Managerial Ability. study indicate that environmental uncertainty affects tax
avoidance and managerial ability strengthens the effect of
environmental uncertainty on tax avoidance. This result may
be due to the large influence of environmental uncertainty
in the company so that the risks obtained are difficult for
managers to overcome.

1
p-ISSN:1411-6510
e-ISSN :2541-6111 JURNAL Riset Akuntansi dan Keuangan Indonesia Vol.8 No.1 April 2023

INTRODUCTION profitable usually encourages efforts to evade or

reduce taxes. The act of fraud and evasion is a form
In building a strong economy, Indonesia of resistance to taxes. Avoidance or resistance to
requires substantial funds. Indonesia receives funds taxes is an obstacle that occurs in tax collection
from the State Revenue and Expenditure Budget so that it can result in reduced state treasury
(APBN), the largest component of which comes revenues (Puspita & Febrianti, 2017; Suranta et al.,
from taxes. The amount of tax contribution in the 2020). Tax avoidance or commonly referred to as
receipt of the APBN shows that taxes are the holder tax avoidance in general can be regarded as a tax
of an important role in the state. Taxes finance most avoidance scheme to minimize the tax expense by
of the country’s development to encourage national exploiting loopholes in tax regulations of a country
economic growth. Taxes are a source of funds that (Gallemore & Labro, 2015; Jusman & Nosita, 2020).
can handle economic problems in Indonesia, given The purpose of tax avoidance is to minimize the tax
that taxes are the largest source of income at this expense that must be paid (Chen et al., 2010).
time (Astuti & Aryani, 2016) Khan et al. (2017) stated the practice of tax
Since the pandemic Covid-19 begin, the avoidance is mostly carried out by companies,
performance of tax revenues has continued to because even though taxes are a state income, for a
decrease. The decrease in tax revenue is in line company, taxes will be considered as a burden that
with the decrease in economic performance, many reduces their income. The Indonesian government’s
sectors are at a negative level and not a few are desire to impose high taxes is contrary to the
bankrupt. From DJP’s data, until the end of the first thinking of every company that wants taxation to
quarter of 2020, the tax revenue was only Rp. 241.61 be as minimal as possible. Tax becomes company’s
trillion although the pandemic started on March concern because the amount that company must
2020. Compared with the same period last year, pay depends on its net income, which is the greater
clearly saw a decrease of 2.47 percent (Suwiknyo, income received the greater tax that must be paid
2020). However, the manufacturing industry shows (Frank et al., 2009). For companies, tax is an
a large contribution to the economy, which one is expense that can reduce the company’s net income,
through the realization of tax revenues. Until the so company will tend to implement some methods
end of February 2020, the processing industry to reduce tax payment (Jingga & Lina, 2017).
business sector tax payments reached IDR 38.8 An example of a large-scale case is the Panama
trillion. This number makes the manufacturing Papers. In the case of the Panama Papers, a new
sector the largest contributor to tax revenue with term is mentioned, namely “shell company”, where
a portion of 25.9% of the total revenue collected by the company is formally established and according
the DJP (Hidayat, 2021). to applicable regulations but is operated to carry
Although the manufacturing industry has out fictitious company activities or to store assets
a large contribution to the economy, the impact of the company or its founder so that it can reduce
of the Covid-19 pandemic is being felt in various the amount of tax burden that should be deferred
business sectors. The decline in productivity and to the company or its founder (O’Donovan
the number of workers who have been laid off et al., 2019; Obermaier & Obermayer, 2017).
due to the company’s inability to pay wages are Looking at the Panama Papers case, there is a tax
the impacts of the Covid-19 pandemic. On this avoidance phenomenon that can be seen from how
uncertainty condition, the company isn’t able to companies manage their capital or fixed assets.
guarantee to provide a definite profit and also Large companies tend to have greater room for
made companies more vulnerable to financial good tax planning and adopt effective accounting
distress (Hanlon & Slemrod, 2009). Even on these practices to reduce the effective tax rate that occurs
conditions the company still has an obligation to (Fernández-Rodríguez & Martínez-Arias, 2012).
make tax payments, which made a high possibility Likewise in Indonesia, in 2014 there was a total of
to do a tax avoidance (Ghosh & Olsen, 2009; Van IDR 463 trillion in total for foreign investment. But
Gils et al., 2004) unfortunately, many foreign investment claim to
Taxes are seen as something that is not have suffered losses. Based on DJP’s records, of the
profitable for the company. Something that is not total foreign investment that suffered losses of only
about 25%, while the rest were suspected doing a
2 Hanny Purnomo, Rizky Eriandani
 p-ISSN:1411-6510
Vol.8 No.1
Vol.8 No.1 April 2023 JURNAL Riset Akuntansi dan Keuangan Indonesia e-ISSN :2541-6111

tax avoidance and generally these companies are in tax planning, because taxes represent a significant
the manufacturing industry (http://iaiglobal.or.en/ expense for companies. Meanwhile, McGuire et
news-activity/details-847). al. (2014) that environmental uncertainty within
Tax avoidance is a way for a manager to the company makes it difficult for managers to
anticipate environmental uncertainty. Yu et al. determine what actions related to taxes should
(2016) define environmental uncertainty as a be taken. Seviana and Kristanto (2020) also
situation when company does not have competent found that environmental uncertainty causes
information about its internal and external management to tend to take earnings management
operating environment. The volatile environment actions, so that they are not aggressive in
makes managers cannot predict possible future taxation. Research that explains the relationship
events, which is cause companies unable to of environmental uncertainty to taxation is still
estimate their expenses and revenue. There are limited and understudied as well as the inconsistent
some external uncertainties, such as globalization, results of previous studies related to the effect
technological advances, and increasingly fierce of environmental uncertainty on tax avoidance,
competition, make companies face greater causing interest to do further study.
environmental volatile (Lin et al., 2014). Although This study combines Book Effective Tax
it is difficult to predict, the role of managers is very Rate, Cash Effective Tax Rate and Long-run Cash
influential to overcome environmental uncertainty Effective Tax Rate as the proxies of Tax Avoidance.
with developed strategies (Ghosh & Olsen, 2009). The use of these three proxies with sample of 5
In anticipating a volatile environment, the years of manufacturing companies in Indonesia is
ability of a manager can be an important factor expected for more accurate results. This research
because managers can choose relevant strategies is in the context of the need for transparency and
to deal the environmental uncertainty (Sun & fairness which is a management responsibility
Price, 2016). A capable manager will be very much to stakeholders especially the government, so it
needed for the company, because the progress of a is important to maintain the credibility of the
company depends on how the manager manages company by minimizing tax avoidance. This study
the company. A capable manager is considered to focuses on what factors can affect tax avoidance in
have high ability and integrity as well as experience. a company both internally and externally.
With this ability, managers can predict
demand, understand about industry and technology THEORETICAL FRAMEWORK AND
trends, and also motivate their employees to work HYPOTHESES
more efficiently and effectively (Demerjian et al.,
Agency Theory
2012). Companies need managers who are capable
even though they do not have sufficient information Agency theory is defined as a contract between
to project something accurately in the future or one or several principals that authorizes another
there is environmental uncertainty (Akbari et person (the agent) to make decisions in running
al., 2018). Hence, the amount of expense, income the company (Jensen & Meckling, 2019). Bathala
and company’s losses or profit received becomes and Rao (1995) suggest that there is a relationship
more certain. Certainty of losses or profits tends to between two individuals where one becomes the
make managers less aggressive to do tax avoidance principal and the other becomes the agent. The
(Koester et al., 2017; Park et al., 2016). principal assigns certain tasks to the agent, then the
agent agrees to carry out the task by giving some
There are several studies related to the effect
considerations to the principal. Agency theory has
of environmental uncertainty on tax avoidance that
a focus on the relationship between two actors who
have inconsistent results. Previous study conducted
have different interests, between the agent and the
Huang et al. (2017) by stated that environmental
principal. This theory also provides an overview
uncertainty related to tax avoidance. Hanlon
of the separation between management and
and Heitzman (2010) stated that environmental
shareholders.
uncertainty has a significant effect on tax avoidance.
In an uncertain environment, companies tend to Eisenhardt (1989) states that agency theory
be more careful in planning strategies, including uses three assumptions of human nature,

The Effect of Environmental... 3

p-ISSN:1411-6510
e-ISSN :2541-6111 JURNAL Riset Akuntansi dan Keuangan Indonesia Vol.8 No.1 April 2023

namely: (a) humans are generally self-interested competition, through changes in market and
(self-interest), humans have limited thinking power technology, has made company management more
regarding future perceptions (bounded rationality), complex and difficult (Lam & Yeung, 2010). On
and Humans always avoid risk (risk averse). Based the other hand, shareholders want managers to
on the assumption of human nature, managers be able to increase wealth and maximize profits.
as humans will act opportunistically, namely This condition encourages managers to use their
prioritizing their personal interests. discretion to carry out earnings management, tax
This separation has the aim of achieving management, tax planning, and tax avoidance.
effectiveness and efficiency in managing the Most corporate taxpayers assume paying taxes
company by hiring the best agents in managing as an expense because corporate finance shifts from
the company. There is a relationship between the business sector to the public (Arieftiara et al.,
management, shareholders and government within 2015). As a result, managers who are responsible for
the framework of agency theory in tax avoidance paying corporate taxes are generally psychologically
activities. The separation between principal and effected by their natural tendency as human beings
agent can lead agent to take the company’s tax to not pay taxes (Eisenhardt, 1989). Therefore, the
desicion based their interest, although tax avoidance manager is ultimately committed to lowering costs,
doesn’t directly reflect the agency problem (Hanlon including tax payment to make maximum profit
& Heitzman, 2010) (Arieftiara et al., 2015). By doing a tax avoidance,
company will gain additinal funds so the cash
Enviromental Uncertainty & Tax Avoidance flow will be more stable and reduce the risk of
Enviromental uncertainty is the concept of enviromental uncertainty. It is consistent with
the level of change in environmental characteristics previous study, that found the more significant
that can affect the company’s operations, such volatile environment will cuased more tax avoidance
as uncertainty from suppliers, customers, activity (Huang, 2017; Arieftiara, 2017; (Seviana &
competitors, and policy makers (Ghosh & Olsen, Kristanto, 2020)
2009). Environmental uncertainty is an individual’s
limitation in assessing the probability of failing H1: Environmental uncertainty is positively related
or succeeding in a decision that has been made to tax avoidance
(Duncan, 1972). Meanwhile Hanlon and Heitzman
(2010) defiend that environmental uncertainty Moderating Effect: Managerial Ability
makes managers make plans to adjust company The ability of a manager can be an important
conditions to uncertain conditions, one of which is factor in anticipating volatile environment through
tax planning because taxes are part of a significant the selection of relevant strategies. The skills or
cost planning. A company cannot develop in a abilities possessed by a manager can have a good
way that only reflects its goals and needs without influence on the management and control of the
regard to its environment. Various environmental company to achieve success in financial performance
conditions can affect the level of company (Schellhorn & Sharma, 2013). Because the more
performance (Elsayed & Paton, 2005). So it can be knowledge a manager has, the more capable the
said that the environment will affect the strategy manager will be in controlling the business he runs.
and decision making by managers for the purpose A capable manager should be able to make wise
of maximizing company profits. decisions under any circumstances. The results
In line with agency theory Jensen and of managerial skills can reduce decision-making
Meckling (2019) managers are responsible for actions that can harm the company because when
managing shareholder assets under all conditions, managers make decisions there are usually various
including when the company faces conditions of inhibiting factors such as information uncertainty
high uncertainty in the business environment. and conflicting views (Djuitaningsih & Rahman,
Based on agency theory, in conditions of high 2012).
environmental uncertainty, it will encourage Companies need managers who are capable
managers to consider legal ways to manage taxes, even if they do not have sufficient information to
namely through tax avoidance. Increasing business project something accurately in the future or in the

4 Hanny Purnomo, Rizky Eriandani

 p-ISSN:1411-6510
Vol.8 No.1 April 2023 JURNAL Riset Akuntansi dan Keuangan Indonesia e-ISSN :2541-6111

presence of environmental uncertainty (Khurana et cash taxes and earnings (Hanlon and Heitzman,
al., 2018). Based on previous study, we motivated 2010).
to incorporate managerial ability to our hypothesis.
We argue that more capable managers will engage Total Tax Expense
less in tax avoidance activity and also more able GAAPETR = (1)
Pre-tax Income
to adapt in a uncertain environment. Capable
managers are expected to be able to overcome the
Total Cash Tax
occurrence of volatile environment by capable to CASHETR = (2)
manage their existing resources, so they don’t need Pre-tax Income
to take something risk like doing a tax avoidance
(Garg et al., 2020; Park et al., 2016). ∑ Total Cash Tax
CASHETR5 = (3)
∑ Pre-tax Income
H2: Managerial ability weakens the relationship
between environmental uncertainty and tax Enviromental Uncertainty
avoidance. Environmental uncertainty is caused by the
external environment that cannot be controlled
RESEARCH METHOD by the company so that it will affect several things
within the company, one of them is sales. Ghosh
This study uses listed manufacture companies and Olsen (2009) uses the coefficient of variation
on Bursa Efek Indonesia. Based on purposive of sales to calculate sales volatility as a measure
sampling criteria, there are 135 manufacturing of environmental uncertainty. A high sales CV
companies that consistently listed and for the total value will indicate a high level of environmental
it formed 929 firm-year observation. uncertainty as well:
This study use purposive sampling method
and the total sample are 458. After reducing some
companies that not have financial information (4)
in IDR, their fiscal year ended not on December
31st,have a negative pre-tax income, the annual
report is not complete for 5 years before (t-5). Table 1. Sample Selection
Another things that exculde on the sample is
Firm-year
inflential outliers, there are 6 observations. The Observation
primer data of this study taken from www.idx.co.id Criteria:
or from the company website. Listed between 2016-2020 929
Less:
Tax Avoidance
Financial Staements are not reported in IDR 78
The dependent variable in this study is Tax Annual Report that ended on other Dec 31 st
29
Avoidance. ased on prior literature, for a more
Company that have negative Pre-tax Income 167
accurate result this study combine 3 proxies
Annual report that have incomplete data 191
to measures tax avoidance. The first one is the
Less: Influential outliers 6
(annual) Book Effective Tax Rate (GAAPETR)
which common measured of tax burden (Phillips Final Sample 458
et al., 2003). Based on Higgins et al. (2015) we
define GAAPETR as total income tax expense Managerial Ability
devided by pre-tax income. Second one, we use the Managerial ability is one of the most
(annual) Cash Effective Tax Rate to measure the tax important factors in maintaining the survival of a
avoidance. Based on Huang et al. (2017), we define company. Because one of the duties of a manager is
the CASHETR as total cash paid devided by pre- to manage profits. If the managerial ability is high,
tax income. As the last proxy, we use the long run the earnings quality will also be high and vice versa,
Cash Effective Tax Rate (CASHETR5) to mitigate if the managerial ability is low, the earnings quality
less measurement of errors and avoid the mismatch will also be low (Francis et al., 2013). Managers

The Effect of Environmental... 5

p-ISSN:1411-6510
e-ISSN :2541-6111 JURNAL Riset Akuntansi dan Keuangan Indonesia Vol.8 No.1 April 2023

who have high abilities will present earnings more DATA ANALYSIS AND DISCUSSION
accurately.
Based on Demerjian et al. (2012) this study Table 2 represents the descriptive statistics
using DEA (Data Envelopment Analysis), the first result of this study. There are nine variables that
stage uses the DEA score to measure the company’s are described in this table which is: independent,
efficiency level with the following equation: dependent and control variables.
The descriptive table in this study shows
that the average value (mean) of environmental
uncertainty as measured by the coefficient of
variation (Demerjian et al.)of sales is 1.178. It can
(5) be said that manufacturing companies experience
conditions of high environmental uncertainty. The
The second stage determines the value of minimum value of the environmental uncertainty
management skills which is the residual value from variable is 0.0901 from the company Darya Varia
the Tobit regression to the DEA score by adding Laboratoria Tbk. And while the maximum value
the company characteristic factor (Demerjian al., of 2.1481 comes from the company Sekar Bumi
2012). The higher the residual value, the higher Tbk. So the smaller the value of environmental
skills. uncertain.
Then the managerial skill variable has an
FE= α+ β Firm Size + β Positive Free Cash Flow average value of 0.2528 which means that managers
+ β ln(Age) + β Complexity + ε (6) owned by manufacturing companies are relatively
less skilled. Aneka Gas Industri Tbk Company is a
The data analysis techniques used in this company that has the lowest managerial skill score
study include: Descriptive Statistical Test, Classical of 0.085. Meanwhile, Chandra Asri Petrochemical
Assumption Test, Multiple Linear Regression Test Tbk, Unilever Indonesia Tbk, Astra International
and Hypothesis Testing with the following model Tbk, Sampoerna Tbk have a large managerial skill
equation: score of 0.6945. It can be said that these companies
have management that is able to manage the
TA = α + β1EU + β2FSize + β3Lev + β4ROA + company efficiently. So if the value is getting closer to
β5PPE + β6RD + β7EQNIC + β8INTAN (7) 0 then the management is considered not successful
in implementing efficiency in the company.
TA = α + β1EU + β1MASCORE For variable GAAPETR and CASHETR
+ β3EU*MASCORE + β4FSize + variables, the average value is quite low, which is
β5Lev + β6ROA + β5PPE + β6RD + 0.2847 and 0.6365. It can be said that companies
β7EQNIC + β8INTAN (8) have a low effective tax rate so they are likely to do
tax avoidance.
TA = Tax Avoidance
EU = Enviromental Uncertainty Table 2. Descriptive Statistic
FSize = Firm Size Variable Mean Min Max SD
Mascore = Management Ability GAAPETR .3847 .0002 8.0317 .6334
Lev = Total Debt/Total Asset
CASHETR .6365 .0010 18.2597 1.4034
ROA = Net Profit/Total Asset
CASHETR5 3.2297 0.305 70.3987 6.6287
PPE = Firm’s PPE
EU 2.1481 0.0901 2.1481 .4402
RD = Firm’s RnD
EQNIC = Total Equity/Total Asset FSIZE 33.4945 22.2035 33.4945 1.6491
INTAN = Intangible Asset/Total Asset LEV 6.5941 0.0005 6.5941 .5521
ROA 158.0114 -1.9084 158.0114 8.0394

6 Hanny Purnomo, Rizky Eriandani

 p-ISSN:1411-6510
Vol.8 No.1 April 2023 JURNAL Riset Akuntansi dan Keuangan Indonesia e-ISSN :2541-6111

Variable Mean Min Max SD proxies (0.000; 0.001; 0.000 <0.05). This means that
PPE 4.3964 0.0003 4.3964 .3205 managerial ability weakens the relationship between
environmental uncertainty and tax avoidance. In
RD 1.9100 0.0000 1.9100 .1113
other words, the presence of a capable manager
EQNIQ 1116.7676 -.8234 1116.7676 52.1618
make companies that experience uncertainty are
INTAN .0087 .0000 .4542 .3648
more likely to avoid tax avoidance.
MASCORE .2528 0.0948 .69454 .3292

Discussion
Table 3. Hypothesis Testing
The The first hypothesis states that
GAAPETR CASHETR
environmental uncertainty is positively related
Model 1 to tax avoidance, supported by the results of this
t -.177 -.184 study. The result also supported the agency theory
P-value .000* .001* by Jensen and Meckling (1976) and support
R2 .046 .039 explanation Arieftiara et al. (2019), which stated on
volatile environment, managers tend to use their
Model 2 personal judgment for decision making, included
t -.395 -.886 in term of tax avoidance to reduce company’s cost.
P-value .000* .001*
Companies that are in a condition of environmental
uncertainty will experience several changes that
R 2
.081 .175
characterize environmental activities that are
Note:*,singfinicance at level 1%
relevant to the company’s operations. Changes
caused by environmental uncertainty, such as
Hypothesis Testing
instability from customers and increasingly fierce
Hypothesis testing in this study was carried out business competition (Davila & Wouters, 2005).
after testing the classical assumptions to make sure From this incident, it will be difficult for managers
the reliability of the data. To analyzed the data, this to plan and control. To minimize the existence
study uses this research is multiple linear regression of conditions of uncertainty, managers must
with alpha 5%. If the results have significance < 0.05 determine strategies and make decisions because
means the independent variables have a significant managers still have the opportunity to respond
effect on the dependent variable. to environmental uncertainty. Environmental
Table 3 shows the regression result of the uncertainty caused by environmental volatile, this
effect between environmental uncertainty and tax makes it difficult for companies to make decisions
avoidance. Three proxies used for tax avoidance and causes companies to be more careful to act in
(CASETR, GAAPETR AND CASHETR5) as the financial statements by avoiding tax. The results of
dependent variables. From regression result of this study are also in accordance with Ghosh and
equation 1, which is testing H1. Based on the Olsen (2009) who support that environmental
regression model, when the dependent variable uncertainty causes companies to carry out strategies
is GAAPETR, has t values as -0.177 with p-value in taxation. The inability to predict something that
0.000. When the CASHETR as the dependent is always changing causes companies to develop tax
variable, the t value is -0.184 with p-value 0.001. planning (McGuire et al., 2014).
Last, when CASHETR5 as the dependent variable, The second hypothesis proved to be supported
the t-value is -0.213 with p-value 0.001. The by the results of the study, managerial skills have
negative and significant coefficients support that a role to weaken the effect of environmental
environmental unceritainty is negatively related to uncertainty. Company management is positioned
ETR which means company more engage to do tax on people who have wider information in
avoidance when they faced a volatile environment
terms of capacity and the overall work
and this is support our first hypothesis (H1).
environment within the company (Ng & Daromes,
Meanwhile, for the second model, 2016). A manager can be said must have skills if the
environmental uncertainty with managerial manager has high intelligence, adequate expertise
capability with moderating variables has a and has a fairly high level of education. A competent
significant negative effect on the three tax avoidance
The Effect of Environmental... 7
p-ISSN:1411-6510
e-ISSN :2541-6111 JURNAL Riset Akuntansi dan Keuangan Indonesia Vol.8 No.1 April 2023

manager will consider the benefits and risks faced environmental uncertainty on tax avoidance.
by the company because of the decisions made. In This result may be due to the large influence of
carrying out their duties, a manager must be guided environmental uncertainty in the company, so
by a professional ethic code, so that every manager’s that the risks obtained are difficult for managers to
decision making should reflect professional overcome, even though managers have high abilities
considerations and not to carry out engineering and even this can indicate that tax avoidance
that aims to benefit oneself or deceive others, tax by competent managers is considered the most
avoidance is a action that a competent manager effective decision in overcoming environmental
should not do (Jiraporn et al., 2016). Therefore, a uncertainty.
capable manager should not carry out activities that This study has the following limitations.
do not reflect the professionalism of a manager. Tax First, it is difficult to measure managerial ability
avoidance is a decision that has a high risk, if the because it is multidimensional. More precise
company is found by the DJP to carry out high tax measures of managerial performance can produce
avoidance and until tax evasion is carried out, the stronger results. Second, the sample only consists
company can be subject to large sanctions and this of manufacturing companies so that it cannot be
creates an additional burden for the company. The generalized to conclusions and requires further
results of this study are in line with Demerjian et al. research that is more specific to other company
(2013) that argued capable managers do not need sectors.
to carry out earnings management or earnings
This study also is expected to bring some
manipulation. This research also in line with Huang
contributions to the theory and practices. As a
et al. (2017)which argued managerial skills can help
contribution to the theory, this study is supporting
companies to reduce tax avoidance activities
the agency theory related to the conflicts between
shareholders and firms that represented by
CONCLUSION, IMPLICATION,
managers. Managers consider legal ways to manage
SUGGESTION, AND LIMITATIONS
taxes, namely through tax avoidance and on the
other hand, shareholders want managers to be
The results of this study indicate that able to increase wealth and maximize profits.
environmental uncertainty affects tax avoidance. Therefore this research is an input for DJP in
Higher environmental uncertainty leads to more terms of implementing better tax regulations and
tax avoidance activity, reflected in lower effective enforcements in order to secure state revenue, to
tax rates. The results of this study indicate assess the risk of tax avoidance, it is necessary to
that managerial ability weakens the effect of consider the managerial profile of the company.

8 Hanny Purnomo, Rizky Eriandani

 p-ISSN:1411-6510
Vol.8 No.1 April 2023 JURNAL Riset Akuntansi dan Keuangan Indonesia e-ISSN :2541-6111

REFERENCE

Akbari, F., Salehi, M., & Vlashani, M. A. B. (2018). The effect of managerial ability on tax avoidance by
classical and Bayesian econometrics in multilevel models: Evidence of Iran. International Journal of
Emerging Markets.
Arieftiara, D., Utama, S., Wardhani, R., & Rahayu, N. (2015). Analisis pengaruh strategi bisnis terhadap
penghindaran pajak, bukti empiris di Indonesia. Simposium Akuntansi Nasional, 18(18), 1.
Arieftiara, D., Utama, S., Wardhani, R., & Rahayu, N. (2019). Contingent fit between business strategies
and environmental uncertainty: The impact on corporate tax avoidance in Indonesia. Meditari
Accountancy Research.
Astuti, T. P., & Aryani, Y. A. (2016). Tren penghindaran pajak perusahaan manufaktur di Indonesia yang
terdaftar di BEI tahun 2001-2014. Jurnal Akuntansi, 20(3), 375-388.
Bathala, C. T., & Rao, R. P. (1995). The determinants of board composition: An agency theory perspective.
Managerial and decision economics, 16(1), 59-69.
Chen, S., Chen, X., Cheng, Q., & Shevlin, T. (2010). Are family firms more tax aggressive than non-family
firms? Journal of financial economics, 95(1), 41-61.
Davila, T., & Wouters, M. (2005). Managing budget emphasis through the explicit design of conditional
budgetary slack. Accounting, Organizations and Society, 30(7-8), 587-608.
Demerjian, P., Lev, B., & McVay, S. (2012). Quantifying managerial ability: A new measure and validity tests.
Management science, 58(7), 1229-1248.
Demerjian, P. R., Lev, B., Lewis, M. F., & McVay, S. E. (2013). Managerial ability and earnings quality. The
Accounting Review, 88(2), 463-498.
Djuitaningsih, T., & Rahman, A. (2012). Pengaruh kecakapan manajerial terhadap kinerja keuangan
perusahaan. Media Riset Akuntansi, 1(2).
Duncan, R. B. (1972). Characteristics of organizational environments and perceived environmental
uncertainty. Administrative science quarterly, 313-327.
Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of management review, 14(1),
57-74.
Elsayed, K., & Paton, D. (2005). The impact of environmental performance on firm performance: static and
dynamic panel data evidence. Structural change and economic dynamics, 16(3), 395-412.
Fernández-Rodríguez, E., & Martínez-Arias, A. (2012). Do business characteristics determine an effective
tax rate? Evidence for listed companies in China and the United States. Chinese Economy, 45(6), 60-
83.
Francis, B., Sun, X., Weng, C.-H., & Wu, Q. (2013). Managerial ability and tax aggressiveness. Available at
SSRN 2348695.
Frank, M. M., Lynch, L. J., & Rego, S. O. (2009). Tax reporting aggressiveness and its relation to aggressive
financial reporting. The Accounting Review, 84(2), 467-496.
Gallemore, J., & Labro, E. (2015). The importance of the internal information environment for tax avoidance.
Journal of Accounting and Economics, 60(1), 149-167.
Garg, M., Khedmati, M., Meng, F., & Thoradeniya, P. (2020). Tax avoidance and stock price crash risk:
mitigating role of managerial ability. International Journal of Managerial Finance.
Ghosh, D., & Olsen, L. (2009). Environmental uncertainty and managers’ use of discretionary accruals.
Accounting, Organizations and Society, 34(2), 188-205.
Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50(2-3),
127-178.

The Effect of Environmental... 9

p-ISSN:1411-6510
e-ISSN :2541-6111 JURNAL Riset Akuntansi dan Keuangan Indonesia Vol.8 No.1 April 2023

Hanlon, M., & Slemrod, J. (2009). What does tax aggressiveness signal? Evidence from stock price reactions
to news about tax shelter involvement. Journal of Public economics, 93(1-2), 126-141.
Hidayat, A. A. N. (2021). Penerimaan Pajak Industri Manufaktur Tumbuh 42,24 Persen Per Mei 2021. Tempo.
www.tempo.com
Higgins, D., Omer, T. C., & Phillips, J. D. (2015). The influence of a firm’s business strategy on its tax
aggressiveness. Contemporary Accounting Research, 32(2), 674-702.
Huang, H., Sun, L., & Zhang, J. (2017). Environmental uncertainty and tax avoidance. In Advances in
taxation. Emerald Publishing Limited.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and
ownership structure. Journal of financial economics, 3(4), 305-360.
Jensen, M. C., & Meckling, W. H. (2019). Theory of the firm: Managerial behavior, agency costs and
ownership structure. In Corporate Governance (pp. 77-132). Gower.
Jingga, V., & Lina, L. (2017). Factors influencing tax avoidance activity: an empirical study from Indonesia
stock exchange. Indian-Pacific Journal of Accounting and Finance, 1(1), 17-25.
Jiraporn, P., Leelalai, V., & Tong, S. (2016). The effect of managerial ability on dividend policy: how do
talented managers view dividend payouts? Applied Economics Letters, 23(12), 857-862.
Jusman, J., & Nosita, F. (2020). Pengaruh corporate governance, capital intensity dan profitabilitas terhadap
tax avoidance pada sektor pertambangan. Jurnal Ilmiah Universitas Batanghari Jambi, 20(2), 697-704.
Khan, M., Srinivasan, S., & Tan, L. (2017). Institutional ownership and corporate tax avoidance: New
evidence. The Accounting Review, 92(2), 101-122.
Khurana, I. K., Moser, W. J., & Raman, K. (2018). Tax avoidance, managerial ability, and investment efficiency.
Abacus, 54(4), 547-575.
Koester, A., Shevlin, T., & Wangerin, D. (2017). The role of managerial ability in corporate tax avoidance.
Management science, 63(10), 3285-3310.
Lam, S. S., & Yeung, J. C. (2010). Staff localization and environmental uncertainty on firm performance in
China. Asia Pacific Journal of Management, 27(4), 677-695.
Lin, Y., Zhao, S., & Li, N. (2014). A study of network-building HR practices for TMT, strategic flexibility
and firm performance: The moderating role of environmental uncertainty. Nankai Business Review
International.
McGuire, S. T., Omer, T. C., & Wilde, J. H. (2014). Investment opportunity sets, operating uncertainty,
and capital market pressure: Determinants of investments in tax shelter activities? The Journal of the
American Taxation Association, 36(1), 1-26.
Ng, S., & Daromes, F. E. (2016). Peran kemampuan manajerial sebagai mekanisme peningkatan kualitas laba
dan nilai perusahaan. Jurnal Akuntansi Dan Keuangan Indonesia, 13(2), 174-193.
O’Donovan, J., Wagner, H. F., & Zeume, S. (2019). The value of offshore secrets: Evidence from the Panama
Papers. The Review of Financial Studies, 32(11), 4117-4155.
Obermaier, F., & Obermayer, B. (2017). The Panama Papers: Breaking the story of how the rich and powerful
hide their money. Simon and Schuster.
Park, J., Ko, C. Y., Jung, H., & Lee, Y.-S. (2016). Managerial ability and tax avoidance: evidence from Korea.
Asia-Pacific Journal of Accounting & Economics, 23(4), 449-477.
Phillips, J., Pincus, M., & Rego, S. O. (2003). Earnings management: New evidence based on deferred tax
expense. The Accounting Review, 78(2), 491-521.
Puspita, D., & Febrianti, M. (2017). Faktor-faktor yang memengaruhi penghindaran pajak pada perusahaan
manufaktur di bursa efek Indonesia. Jurnal Bisnis dan Akuntansi, 19(1), 38-46.

10 Hanny Purnomo, Rizky Eriandani

 p-ISSN:1411-6510
Vol.8 No.1 April 2023 JURNAL Riset Akuntansi dan Keuangan Indonesia e-ISSN :2541-6111

Schellhorn, C., & Sharma, R. (2013). Using the Rasch model to rank firms by managerial ability. Managerial
Finance.
Seviana, A. A., & Kristanto, A. B. (2020). Ketidakpastian lingkungan dan tendensi agresivitas pelaporan
keuangan versus pajak: Efek moderasi kecakapan manajerial. Jurnal Ilmiah Akuntansi dan Humanika,
10(1), 1-11.
Sun, W., & Price, J. M. (2016). The impact of environmental uncertainty on increasing customer satisfaction
through corporate social responsibility. European Journal of Marketing.
Suranta, E., Midiastuty, P., & Hasibuan, H. R. (2020). The effect of foreign ownership and foreign board
commissioners on tax avoidance. Journal of Economics, Business, and Accountancy Ventura, 22(3),
309-318.
Suwiknyo, E. (2020). Kepatuhan Formal Wajib Pajak Melempem, Tren Buruk Berlanjut. Ekonomi & Bisnis.
Van Gils, A., Voordeckers, W., & van den Heuvel, J. (2004). Environmental uncertainty and strategic behavior
in Belgian family firms. European Management Journal, 22(5), 588-595.
Yu, C. L., Wang, F., & Brouthers, K. D. (2016). Competitor identification, perceived environmental
uncertainty, and firm performance. Canadian Journal of Administrative Sciences/Revue Canadienne
des Sciences de l’Administration, 33(1), 21-35.

The Effect of Environmental... 11