The Effectiveness of the Audit Committee in Reducing Tax Avoidance in Mining Companies in Indonesia with External Audit Quality as a Moderating Variable
Keywords:
Tax Avoidance, Audit Committee, External Audit Quality, Corporate Governance, Tax Compliance
Abstract
This study aims to analyze the effect of the audit committee on tax avoidance practices and to examine the role of external audit quality as a moderating variable. The results show that the audit committee significantly reduces the level of tax avoidance. Companies with independent and competent audit committees tend to demonstrate better tax compliance. Furthermore, external audit quality is proven to strengthen the influence of the audit committee in suppressing tax avoidance practices. High-quality external auditors, particularly those from Big Four firms, are more effective in enhancing oversight and detecting potential financial report manipulation related to tax obligations. These findings highlight the importance of corporate governance and external supervision in promoting tax compliance.
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References
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Baron, R. M., & Kenny, D. A. (1986). The Moderator-Mediator Variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Considerations. Journal of Pe~nality and Social Psychology, 51(6), 1173–1182. https://doi.org/10.1177/1350506818764762
Chalevas, C. G., Doukakis, L. C., Karampinis, N. I., & Pavlopoulou, O. C. (2024). The impact of family ownership on tax avoidance: International evidence. International Review of Financial Analysis, 94(November 2023), 103317. https://doi.org/10.1016/j.irfa.2024.103317
Chung, H., & Lee, E. Y. (2024). Does opinion shopping impair auditor independence? Evidence from tax avoidance. Journal of Contemporary Accounting and Economics, 20(1), 100398. https://doi.org/10.1016/j.jcae. 2023.100398
Dang, V. C., & Nguyen, Q. K. (2022). Audit committee characteristics and tax avoidance: Evidence from an emerging economy. Cogent Economics and Finance, 10(1). https://doi.org/10.1080/23322039.2021.2023263
DeAngelo, L. E. (1981). Auditor Size and Audit Quality. Journal of Accounting and Economics, 3, 183–199.
Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Strategic Management: A Stakeholder Approach. https://doi.org/10.1017/CBO978 1139192675
Frisca Tania, F., & Mukhlasin. (2020). The Effect of Corporate Governance on Tax Avoidance: Evidence from Indonesia. Management & Economics Research Journal, 2(4), 66–85. https://doi.org/10.48100/merj.v2i4.126
Ghozali, I. (2021). Ghozali, Imam. 2021. Aplikasi Analisis Multivariete Dengan Program IBM SPSS 23 (10th ed.). Badan Penerbit Universitas Diponegoro.
Jensen, M., C., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency cost and ownership structure. Journal of Finance Economic, 3, 305–360.
Jiang, H., Hu, W., & Jiang, P. (2024). Does ESG performance affect corporate tax avoidance? Evidence from China. Finance Research Letters, 61(October 2023), 105056. https://doi.org/10.1016/j.frl.2024.105056
Kerr, J. N., Price, R., Román, F. J., & Romney, M. A. (2024). Corporate governance and tax avoidance: Evidence from governance reform. Journal of Accounting and Public Policy, 47(August). https://doi.org/10.1016/j.jaccpubpol. 2024.107232
Keuangan, O. J. (2015). Peraturan Otoritas Jasa Keuangan Nomor 55 /Pojk.04/2015 Tentang Pembentukan Dan Pedoman Pelaksanaan Kerja Komite Audit. http://www.ojk.go.id/id/kanal/iknb/regulasi/lembaga-keuang an-mikro/peraturan-ojk/Documents/SAL-POJK PERIZINAN FINAL F.pdf
Long, W., Wu, H., Li, L., Ying, S. X., & Li, S. (2024). Mixed-ownership structure, non-state-blockholder coalition, and tax avoidance. International Review of Financial Analysis, 91(October 2023), 102988. https://doi.org/10.1016 /j.irfa.2023.102988
Lymer, A., Oats, L. (n.d.). Taxation: Policy and Practice, 30th Edition.
Purnomo, H., & Eriandani, R. (2022). Pengaruh Efektivitas Komite Audit dan Penghindaran Pajak: Peran Moderasi Kualitas Audit. E-Jurnal Akuntansi, 32(7), 1743. https://doi.org/10.24843/eja.2022.v32.i07.p06
Qi, J., Yanli, C., & Sun, T. (2023). Government social media and corporate tax avoidance. China Journal of Accounting Research, 16, 2–40.
Wongsinhirun, N., Chatjuthamard, P., Pandej, C., & Jiraporn, P. (2024). Tax Avoidance, Managerial Ownership, and Agency Conflicts. Finance Research Letters, 61, 2–6.
Xiang, J., Zhang, H., Dang, D., & Guan, J. (2023). Involuntary political connections and private firms’ tax avoidance. Pacific Basin Finance Journal, 79(March), 102025. https://doi.org/10.1016/j.pacfin.2023.102025
Published
2025-09-19
How to Cite
Aganthasyah, M., Kusharyanti, K., & Prasetio, J. (2025). The Effectiveness of the Audit Committee in Reducing Tax Avoidance in Mining Companies in Indonesia with External Audit Quality as a Moderating Variable. Indonesian Interdisciplinary Journal of Sharia Economics (IIJSE), 8(3), 11503-11513. https://doi.org/10.31538/iijse.v8i3.8147
Section
Articles
Copyright (c) 2025 Muhammad Aganthasyah, Kusharyanti Kusharyanti, Januar Eko Prasetio
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