Tax Compliance and Uncompliance Entity: A Comparative Study of Investor Reaction

Abstract

As the theory of signals that companies will always give a positive signal so investors are interested, but what about the tax policy taken by the company whether investors react?This research was conducted to determine investor reaction to company policies to comply with tax provisions or not comply with taxation provisions.With regression and comparative analysis, using secondary data from manufacturing companies in Indonesia in 2013-2017, it is known that investors react more significantly to corporate tax non-compliance policies compared to company policies to comply.However, with a positive reaction on tax non-compliance and negative reaction on corporate tax compliance, it indicates that investors in Indonesia are more concerned with the company's short-term performance in the form of current profits compared to long-term performance in the form of future profits which are likely to be affected by tax penalties arising from tax uncompliance.

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