The Moderating Earnings Management on the Impact of CEO Narcissism, Sales Growth, and Profitability on Tax Avoidance

Abstract

The purpose of this study is to indicate the effect of CEO narcissism, sales growth, and profitability proxied by Return On Assets (ROA) on tax avoidance with earnings management as moderating variable in manufacturing companies listed on the Indonesia Stock Exchange from 2016 to 2019. This study relies on secondary data obtained from annual reports from the official website of the Indonesia Stock Exchange, namely www.idx.co.id. The sample is selected based on certain criteria, with 57 companies obtained. Data analysis was performed by panel data regression. The findings of this study indicate that earnings management can moderate the relation between CEO narcissism and sales growth on tax avoidance. The role of earning manipulation activities strengthens the CEO of the company to carry out tax avoidance activities. Earnings management also plays a role in sales variables closely related to profit and taxes. Meanwhile, CEO narcissism, sales growth, and profitability had no significant effect on tax avoidance, and earnings management cannot moderate the relationship between profitability and tax avoidance. Company in doing tax avoidance does not always consider Return on Asset or caused by other reasons.