Tax Aggressiveness and Politically Connected Company

Abstract

This study investigates the tax aggressiveness in politically connected companies. Based on the relation-based system, politically connected companies tend to be more tax aggressiveness due to its benefit of being a tax aggressiveness. Using 625 companies-years observations, we reveal that politically connected companies listed in Indonesia Stock Exchange are likely to be more aggressive in tax. Applying the independent t test, however, there is no significant difference between politically connected companies and non-connected companies. The finding also indicate that the profitability is higher for politically connected companies rather than non-connected. Contract to profitability, politically connected companies’ leverage is lower than nonconnected. This study has theoretical and practical implications and they discuss in detail in this article. Keywords: Tax Aggressiveness, politically connected companies, Indonesia

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