Volume 8, Issue 8, August 2023 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

The Effect of Tax Avoidance, Profit Management,

Managerial Ownership on Tax Disclosure
(Empirical Study of Mining Sector Companies Listed on the IDX 2019-2021)
Hilmi Fahmi1, Erna Setiany2
*Departement of Accounting, Universitas Mercu Buana

Abstract:- The purpose of this study is to examine and two DGT's corrections. Hakim Budi mentioned the positive
analyze the effect of tax avoidance, profit management and corrections made by the DGT regarding police and military
managerial ownership on tax disclosure at mining support services or security assistance from elements of the
companies in Indonesia that are listed on the Indonesia TNI/Polri worth USD 4,940,258. The Chief Judge continued
Stock Exchange for the 2019-2021 period. The data in this that the panel also defended the DGT's correction of the
study were obtained from the company's financial professional fee component of USD 2,813,595. Both
statements and annual reports on the Indonesian Stock corrections were defended because Freeport did not have
Exchange (IDX) website or related company websites. The enough evidence to convince the panel of judges.
samples used in this study were 23 mining companies listed
on the IDX for the 2019-2021 period, with a total of 69 According to Kristen in Pratama & Pratiwi (2022) Tax
samples. The sampling technique is pursosive sampling transparency provides information that can be used by the
method. The analytical tool used to analyze the hypothesis public to assess company activities. For example, the copper
is Eviews 10. with the analysis model, namely the random mining industry in Zambia came under heavy fire after its tax
effect model. The results showed that managerial ownership audit information was leaked. The industry only pays 0.6% of
had a effect on tax disclosure, while tax evasion and its profits to the government.
earnings management had no effect on tax disclosure.
One of the factors taxpayers avoid disclosure obligations
Keywords:- Tax avoidance, earnings management and by reducing the company's taxable profit. To minimize this,
managerial ownership of tax disclosure disclosure of complete tax information can provide an
opportunity to estimate the increased amount in corporate tax
I. INTRODUCTION returns. (Kvaal & Nobes, 2013).

Tax disclosure has long been a public concern. Companies Previous research related to tax disclosure in financial
provide tax disclosures as part of their financial reporting, either statements is still small. This research contribute to explaining
on a voluntary or mandatory basis. However, the level of tax the variables that can affect the level of tax disclosure and aims
disclosure is still problematic because of the confidentiality to explain the gap in the current level of tax disclosure in the
aspect of taxation. This practice is very important because many financial statements, therefore the authors are interested in
parties need information. Companies that report their tax examining the ‘‘Effect of Tax Avoidance, Profit Management,
obligations require that their financial statements be adjusted to Managerial Ownership, on Tax Disclosure. (Empirical Study of
tax provisions to determine the basis of their tax obligations. To Mining Sector Companies Listed on the IDX 2019-2021)”.
prove this obligation, it is not uncommon for further disclosures
II. LITERATURE REVIEW AND HYPOTHESIS
to be required related to the tax obligations of the company as
an entity (Pratama & Pratiwi, 2022). A. Agency Theory
Agency theory is a theory that explains the concept of a
Global activists are also asking governments to regulate
contractual relationship between the principal (owner) and the
the disclosure of information regarding how much tax is paid,
agent (management of a company) to perform services on
especially how much is paid by multinational companies. The
behalf of the principal which involves delegating decision-
phenomenon of tax disclosure that occurred in the mining sector
making authority to the agent, this theory was first discovered
where PT Freeport Indonesia was involved in a corporate
by Jensen & Meckling (1976).
income tax (PPh) dispute in 2016. The dispute case went to the
Tax Court and now the Panel of Judges has granted part of the Meanwhile, according to Wanti et al (2020) In the agency
dispute regarding the net income figure submitted by PT theory model, companies are described as a collection of
Freeport Indonesia. In the first dispute, the DGT made positive contracts between parties who interact within the company
fiscal corrections to the company's net income. The positive (stakeholders). Each party will act according to its own interests
correction consists of four components, Police and military so that conflicting interests will emerge.
support service fees, professional fees, supplies costs, and IT
costs. Against the components in the first dispute, the panel of
judges defended the DGT's two corrections, and canceled the

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ISSN No:-2456-2165
Based on this understanding, this can happen because about how the tax results of the fiscal reconciliation, which
company managers know more about company conditions and forms the basis of corporate tax reporting. In this study, tax
internal information than company owners. (Gunawan, 2017) disclosure (Tax Disclosure) can be measured using the
company's Tax Disclosure level. Therefore, this study measures
So it can be concluded that Agency Theory with interests. the level of tax disclosure. organization by assigning a score to
This raises information disclosed by company managers in Tax Disclosure. data given the number of items disclosed in the
relation to tax impacts and corporate tax minimization company's annual report.
strategies to take advantage and maximize profits.
Based on this understanding, it can be concluded that Tax
B. Legitimacy Theory Disclosure is a policy tool that can be used to provide tax
Legitimacy theory explains that entities, such as companies, information that can support the quality of financial reports
are required to comply with contracts and social norms when disclosed to the public.
operating. Legitimacy theory was first put forward by Dowling
and Pfeffer (1975). He stated that legitimacy can be said to be a D. Tax Avoidance
potential benefit or source for a company to be able to survive According to Moeljono (2020) is an effort to avoid taxes
and survive in developing the company. His requires companies legally because this does not conflict with tax provisions. The
to carry out their company operations by paying attention to methods and techniques used take advantage of the weaknesses
surrounding social environmental factors, in their disclosures. in tax laws and regulations to minimize the amount of tax
Elfeky (2017) argues that companies need to increase greater payable.
voluntary disclosure, because they have a social contract with
the community. This disclosure is necessary to ensure that the The reason that taxpayers can take tax evasion is because
company complies with regulations and ethics from society. the tax collection system in Indonesia adheres to a self-
assessment system, which is a tax collection system that
Therefore, this disclosure must be informed by the authorizes taxpayers to be able to calculate the amount of tax to
company to the public through documents that can be accessed be paid by themselves (Tahar & Rachmawati, 2020).
easily by the public, such as an annual report. This is supported
by previous researchers Cadiz Dyball (1998) who argues that Measurement of tax avoidance using Cash ETR is used to
annual reports can help the public to obtain information whether describe tax avoidance activities by companies because Cash
company activities are in line with community values. ETR will provide information on how much cash is actually
paid by the company. Measurement of tax avoidance by proxy
Based on this understanding, it can be concluded that CETR according to research (Subagiastra et al., 2016)
Legitimacy Theory by making disclosures can affect the level
𝑻𝒂𝒙 𝑷𝒂𝒚𝒎𝒆𝒏𝒕
of legitimacy of a company. This level of legitimacy will also 𝑪𝑬𝑻𝑹 = 𝑷𝒓𝒐𝒇𝒊𝒕 𝑩𝒆𝒇𝒐𝒓𝒆 𝑻𝒂𝒙
affect the level of public or environmental acceptance of the
company. E. Earning Management
Earnings management can be interpreted as one of the
C. Tax Disclosure efforts of company managers to intervene or influence
Mgammal et al., (2018) explained that disclosure of income information in financial statements with the aim of tricking
tax information is a policy instrument tax system. Furthermore, stakeholders who want to know the performance and condition
Francois in Mgammal & Ku Ismail (2015) defines tax of the company. The terms intervention and deception are used
disclosure as a term used to describe two different situations.
as the basis for some parties to assess earnings management as
The first is the legal requirement to provide up-to-date tax
fraud (Sulistyanto, 2018).
information to other parties. The second concerns transactions
that can be considered as tax havens and must be reported to the According to Utami in Kurnia & Arafat (2015) To detect
government in connection with income tax declarations. whether there is earnings management, the measurement of
accruals is a very important thing to pay attention to. Total
Meanwhile, according to Kvaal & Nobes. (2013) states
accrual is the difference between profit and cash flow from
that disclosure of complete tax information can provide an
operating activities. Total accruals can be divided into two
opportunity to estimate the amount that increases in corporate parts, namely: (1) accruals which naturally exist in the process
tax returns. By comparing financial statements and analyzing of preparing financial statements, called normal accruals or
them to get an idea of the amount of financial reporting, non-discretionary accruals, and (2) accruals which are
company performance and strategy, such as quality of earnings, accounting data called abnormal accruals or discretionary
appropriateness of depreciation schedules, level of political accruals. . Some of the reasons why the Utami Modified model
understanding and tax planning. Based on Bapepam-LK is better are:
regulation No.X.K.6, tax disclosures that support the quality of
 Utami's modification is simpler compared to Jones' model
public company financial reports contain at least the following:
or Jones's modification.
the relationship between income tax and commercial profits,
current fiscal reconciliation and tax accounting, and a statement  Utami's modification is more relevant to the fact that most
profit management is carried out using working capital

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ISSN No:-2456-2165
accrual components, specifically accrual from sales and Therefore, it is hypothesized that the level of corporate tax
operating costs Given that the Indonesian capital market is disclosure is associated with tax evasion.
still at an informationally efficient level, Utami's simple
modification is easier for market participants (investors) to B. Profit Management on Tax Disclosure
understand so that they respond faster. In the relationship between earnings management and tax
disclosure is where the company performs earnings
F. Managerial ownership management, namely by tending to minimize company profits,
Shareholders with a company management position, either this is done so that profits are used as the basis for tax
on the supervisory board or as a manager, are called holding imposition to be small, therefore disclosure of financial
management. According to Jensen & Meckling (1976) statements is important for users of information, especially
explaining agency theory states that companies that separate the relating to the disclosure of taxes paid by the company.
management function from the ownership function have
consequences that are sensitive to conflicting interests. The According to Harsono and Ricky Lazarus, (2021) stated
decisions and actions of companies that are owned by the board that earnings management can affect corporate tax disclosure.
will certainly be different from companies that do not have
managerial ownership. In management-owned companies, C. Managerial Ownership of Tax Disclosure
managers who are also shareholders naturally combine their Managerial ownership of the company can also make the
interests as managers and shareholders. If the manager is not a decision not to disclose taxes in order to get more revenue.
shareholder, the situation is different, the manager may only found that in agency theory, CEO ownership serves to align
look out for his own interests. management behavior with the interests of shareholders
(Kharisma & Rachman, 2017).
According to Nugraha & Setiany (2020) Managerial
ownership is the ownership of company management shares, IV. RESEARCH METHODS
measured as the percentage of shares owned by management, This type of research uses quantitative research methods.
namely directors and commissioners. This is expressed by using The quantitative research used is causal quantitative. The
the percentage of ownership of the company's management. research population is all mining sector companies listed on the
In this study, managerial ownership is measured by the IDX in 2019-2021. Determination of the research sample used
number of shares owned by managers (directors and a purposive sampling technique, with the following criteria:
commissioners) to the total outstanding shares. Managerial  Mining sector companies listed on the Indonesia Stock
ownership will be calculated by the following formula: Exchange (IDX) for the 2019-2021 period.
 Published a complete annual financial report for the period
𝐍𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐌𝐚𝐧𝐚𝐠𝐞𝐫𝐢𝐚𝐥 𝐒𝐡𝐚𝐫𝐞𝐬
KM= 𝐍𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐎𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠 𝐒𝐡𝐚𝐫𝐞𝐬 × 100% 2019-2021.

The data analysis method used in this study is a

III. HYPOTHESIS quantitative method which is then processed and then tested
using multiple linear regression models to assess multivariate
A. Tax Avoidance of Tax Disclosure
relationships between each variable.
Corporate tax evasion has become a considerable public
concern, especially since the 2008 global financial crisis (Oats In this study will be analyzed using multiple regression
& Tuck, 2019). The relationship between tax avoidance and analysis tool models processed using Microsoft excel and
transparency of tax disclosure can have various effects, for Eviews 10 software programs. The multiple linear regression
example, since 2016, the United Kingdom has implemented a equation can be formulated as follows:
tax reform that requires certain categories of companies to make
separate disclosures related to corporate taxation strategies, and PKP = a + b1PHP + b2ML + b3KM+e
this has seen a significant increase in voluntary disclosure in
annual reporting. . However, no significant effect was found on Information:
tax evasion. Companies with low reporting quality have a PKP = Tax disclosure
higher level of tax evasion. In the United States, a Securities a = Constant
and Exchange Commission (SEC) comment letter is issued to b = Regression Coefficient
companies, requiring additional disclosure. (Bilicka et al., PHP = Tax avoidance
2021). ML = Profit management
KM = Managerial ownership
Furthermore, Kubick et al. (2016) argue in his research e = Error
that this additional disclosure request can reduce the level of tax
evasion. Companies with high levels of tax avoidance tend to
avoid tax disclosures; thus, when there is a demand for tax
disclosure, the rate of corporate tax avoidance tends to decrease.

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V. RESULTS

A. Descriptive Statistical Test Results

Table 1: Descriptive Statistical Test Results
PKP PHP ML KM
Mean 0.228551 0.288116 0.195652 0.063333
Maximum 0.330000 0.960000 12.07000 0.960000
Minimum 0.110000 0.000000 -10.68000 0.000000
Std. Dev. 0.061865 0.212099 2.275544 0.197950
Observations 69 69 69 69

Information: D. Profit Management (X2)

Y : Tax Disclosure (PKP) Based on the data processing that has been done, it can be
X1 : Tax Avoidance (PHP) seen that the Profit Management (ML) variable has a mean or
X2 : Profit Management (ML) an average of 0.195652 with a maximum value of 12.07000 is
X3 : Managerial Ownership (KM) found in PT. Bumi Resources Minerals Tbk and a minimum
value of -10.68000 is found at PT. Bumi Resources Minerals
Based on the descriptive statistical test table above, Tbk. with a standard deviation of 2.275544 which means that
information is obtained that: the maximum increase is variable average. The increase in
Profit Management (ML) was +2.275544, while the maximum
B. Tax Disclosure (Y) decrease of the average of the Profit Management (ML)
Based on the data processing that has been done, it can be variable was -2.275544. The increase in Profit Management
seen that the Tax Disclosure variable (PKP) has a mean or an (ML) was +1.579140, while the maximum decrease of the
average of 0.228551 with a maximum value of 0.330000 is average of the Profit Management (ML) variable was -
found in PT. Bukit Asam Tbk and minimum value 0.110000 is 1.579140.
available at PT. Bumi Resources Minerals Tbk. with a standard
deviation of 0.061865 which means that the maximum increase E. Managerial Ownership (X3)
is variable average. The increase in Tax Disclosure (PKP) was Based on the data processing that has been done, it can be
+0.061865, while the maximum decrease from the average seen that the Managerial Ownership (KM) variable has a mean
variable Tax Disclosure (PKP) was -0.061865. or an average of 0.063333 with a maximum value of 0.960000
is found in PT. J Resources Asia Pasifik Tbk and minimum
C. Tax Avoidance (X1) value of 0.000000 is found at PT. Aneka Tambang Tbk. with a
Based on the data processing that has been done, it can be standard deviation of 0.197950 which means that the maximum
seen that the variable Tax Avoidance (PHP) has a mean or an increase is variable average. The increase in Managerial
average of 0.288116 with a maximum value of 0.960000 is Ownership (KM) was +0.197950, while the maximum decrease
found in PT. Adaro Energy Indonesia Tbk and a minimum value of the average variable Managerial Ownership (KM) was -
of 0.000000 is found at PT. Samindo Resources Tbk. with a 0.197950.
standard deviation of 0.212099 which means that the maximum
increase is variable average. The increase in Tax Avoidance F. Classical Assumption Test
(PHP) was +0.212099, while the maximum decrease of the Classical assumption tests are performed before using
average of the variable Tax Avoidance (PHP) was -0.212099. regression models which aim to test whether in regression
models, residual variables have a normal distribution. This
classical assumption test consists of a data normality test, a
multicollinearity test, a heterokedasticity test, and an
autocorrelation test.

G. Normality Test Results

16
Series: Residuals
14 Sample 1 69
Observations 69
12
Mean -3.61e-17
10 Median -0.009366
Maximum 0.109389
8 Minimum -0.129535
Std. Dev. 0.060536
6 Skewness -0.189045
Kurtosis 2.530208
4
Jarque-Bera 1.045512
2 Probability 0.592884
0
-0.10 -0.05 0.00 0.05 0.10

Fig. 1: Normality Test Results

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Based on the picture above, it shows that the Jarque-Bera significant level of 0.05, so it can be concluded that the data in
through the statistical software Eviews.10. Value is 1.045512 this study are normally distributed.
with a probability value of 0.592884 which is greater than the

H. Multicolliearity Test

Table 2: Multicolliearity Test Results

No Variable VIF Information
1 Tax Avoidance 1.155576 No Multicollinearity
2 Profit Management 1.007278 No Multicollinearity
3 Managerial Ownership 1.148182 No Multicollinearity

Based on the results of the multicollinearity test in the Ownership is less than 10. Thus it can be concluded that the
table above, it shows that the VIF value for the variables Tax four variables are free from multicollinearity problems because
Disclosure, Tax Avoidance, Profit Management, Managerial the VIF value < 10.

I. Chow Test Results

Table 3: Chow Test Results
Redundant Fixed Effects Tests
Equation: Untitled
Test cross-section fixed effects
Effects Test Statistic D.F. Prob.

Cross-section F 18.951900 (22,43) 0.0000

Cross-section Chi-square 163.523089 22 0.0000

Based on the results of the chow-test above, it can be seen accepted. That is, the model estimation approach follows the
that the probability value of the F test is 0.0000 < 0.05 and the fixed effect model. In other words, the fixed effect model is
chi-square is 0.0000 < 0.05. Thus, Ho was rejected and H1 was better than the common effect model.

J. Hausman Test)
Tabel 4 Hasil Uji Hausman (Hausman Test)
Correlated Random Effects – Hausman Test
Equation: Untitled
Test cross-section random effects

Test Summary Chi-Sq. Statistic Chi-Sq. D.f. Prob.

Cross-section random 2.484318 3 0.4781

Based on the results of the Hausman test on the able K. Random Panel Data Regression Results
above, it can be seen that the probability value in the random Before the panel data regression test was carried out, a
cross section test is 0.4781 which means it has a significance classical assumption test was first carried out to ensure that the
greater than the confidence level (significance level) 95% (α = regression coefficient did not occur, and the best panel data
5%). So that the decision taken on this Hausman test is that Ho regression model in this study was decided using a random
is accepted and H1 is rejected. In other words, the model effect model.can be seen in the table.
follows the random effect model method. Or it can be
concluded that the random effect model method is better than
the fixed effect model method.

Table 5: Random Panel Data Regression Results

Dependent Variable: PKP
Method: Least Squares
Date: 08/07/23 Time: 13:20
Sample: 69

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Included observations: 54
HAC standard errors & covariance (Bartlett kernel, Newey-West fixed
bandwidth = 4.0000)

Variable Coefficient Std. Error t-Statistic Prob.

C 0.219319 0.019647 11.16300 0.0000

PHP 0.045656 0.047529 0.960592 0.1702
ML -0.001893 0.003859 -0.490540 0.3127
KM -0.056093 0.029711 -1.887945 0.0318

R-squared 0.042510 Mean dependent var 0.228551

Adjusted R-squared -0.001682 S.D. dependent var 0.061865
S.E. of regression 0.061917 Akaike info criterion -2.669820
Sum squared resid 0.249192 Schwarz criterion -2.540307
Log likelihood 96.10879 Hannan-Quinn criter. -2.618438
F-statistic 0.961931 Durbin-Watson stat 0.830209
Prob(F-statistic) 0.416134 Wald F-statistic 1.344555
Prob(Wald F-statistic) 0.267661

Based on the data above, PKP = 0.219319 + 0.040656 PHP - 0.001893 ML - 0.056093 KM + ε

From the equation model above, it can be explained that Meanwhile and Profit Management and Managerial Ownership
based on the results of the regression test with HAC shows that have a negative relationship with Tax Disclosure.
Tax Avoidance has a positive relationship with Tax Disclosure.

VI. HYPOTHESIS TESTING RESULTS

 Effect of Tax Avoidance, Profit Management, Managerial Ownership, Against Tax Disclosure.

Table 5: Results of Determination Analysis (R2)

The regression model used in the study based on the above test is as follows: The regression model used in the study based on the above test is as follows:
PKP = 0.219319 + 0.040656 PHP - 0.001893 ML - 0.056093 KM + ε PKP = 0.219319 + 0.040656 PHP - 0.001893 ML - 0.056093 KM + ε

Based on the results of data processing, the R-Squared the dependent variable, namely tax disclosure of 4.25%. The
value is 0.042510. This can be interpreted that the independent remaining 95.75% was explained by other variables outside the
variables in this study, namely tax avoidance, profit research model.
management and managerial ownership together can explain

 Statistical Test F

Table 6: Statistical Test Results F

F-statistic Prob(F-statistic)
Tax avoidance, Profit management and managerial ownership 0.961931 0.416134

Based on the value of F-Statistic and the value of Prob (F- independent variables in this study, namely tax avoidance,
statistic) in this study is 0.961931 with a probability value of profit management and managerial ownership together do not
0.416134. The statistical probability value F is greater than the have a significant effect on the variable tied to tax disclosure.
significant value α = 5%, so it can be concluded that the

 Statistical Test t

Table 6: Statistical Test Results F

Variable Relationships β Sig Conclusion
PHP  Y 0.045656 0.1702 No Effect, H1 Rejected
ML  Y -0.001893 0.3127 No Effect, H2 Rejected
KM  Y -0.056093 0.0318 Influential, H3

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Information 5%). These results show that profit management has no effect
Y : Tax Disclosure (PKP) on tax disclosure in mining sector companies listed on the
X1 : Tax evasion (PHP) Indonesia Stock Exchange (IDX) for the period 2019 - 2021.
X2 : Earnings management (ML) The results of this study support the legitimacy theory that
X3 : Managerial Ownership (KM) companies attempt to seek recognition and support from
stakeholders by maintaining the company's reputation and
VII. DISCUSSION image as a legitimate and ethical entity. Proper and transparent
tax disclosure is also important in building corporate
A. Tax Avoidance affects Tax Disclosure legitimacy. Transparent tax disclosure helps stakeholders
Based on the test results showed that the first hypothesis was understand the company's tax obligations and ensure that the
rejected. This is because based on obtaining the coefficient company complies with applicable tax regulations. Profit
value (β) with a negative direction of 0.045656 and a management is the practice by which companies make
Significance value of 0.1702 > 0.05 (significance level of 5%). adjustments in their financial statements to achieve certain
These results show that Tax Avoidance has no effect on Tax goals, such as showing better performance than reality. Profit
Disclosure in mining sector companies listed on the Indonesia management practices may include changes in accounting
Stock Exchange (IDX) for the period 2019 - 2021. This result estimates, delays in recognition of revenues or expenses, or
is in line with the agency theory proposed by Jensen & using accounting methods that can result in higher profit
Meckling (1976) that the company is described as a collection figures. In legitimacy theory, accurate and comprehensive tax
of contracts between parties who interact within the company disclosure becomes essential to maintain stakeholder support
(stakeholders). Each party will act in accordance with its own and trust. If information about tax positions is not disclosed
interests so that conflicting interests will arise. Thus, there is a transparently, companies may be perceived as less trustworthy
conflict of interest between management as an agent or party or try to conceal unethical practices.
who calculates and reports company taxes with the principal as
the owner of the company. Agency conflicts between Profit management practices can lead to significant
shareholders and company management may encourage disclosure deficiencies in tax-related financial statements. This
management to engage in tax avoidance for their personal can include vagueness regarding tax calculation methods,
benefit or to avoid pressure from shareholders to increase differences between tax profits and accounting profits, or the
corporate profits. Agency conflicts can cause company potential for significant tax disputes. Companies that perform
management to hide information or make limited tax profit management to reduce their tax liability may tend to hide
disclosures so that shareholders are not aware of tax avoidance relevant tax-related information. They can use accounting
practices. methods that complicate the identification of transactions or
reveal detailed information about the actual tax burden.
Tax disclosure aims to increase transparency and provide Managers carry out profit management because of the desire to
useful information for stakeholders. By disclosing detailed tax reduce the tax burden. So, the more aggressive the company
information, companies can demonstrate their financial conducts profit management, it can be said that the level of
performance and the extent of their contribution to the state. Tax aggressiveness of corporate taxes is also high because the tax
avoidance, on the other hand, can create the impression that burden is getting smaller (Suyanto, 2012).
companies or individuals are not contributing fully according to
their obligations. Clear and transparent tax disclosures can This result is different from the research of Mgammal,
affect a company's reputation and public perception of them. Bardai and Ismail (2018) and (Harsono &; Lazarus, 2021)
Companies seen to avoid taxes may be perceived as less shows positive results that significantly affect tax disclosure.
socially responsible and trigger negative reactions from
consumers, shareholders, and the general public. Therefore, C. Managerial Ownership Affects Tax Disclosure
accurate and honest tax disclosure is important to maintain the Based on the test results showed that the third hypothesis
company's reputation and social responsibility. was rejected. This is because based on partial testing (t-test) the
coefficient value (β) with a positive direction of -0.056093 and
This result is in line with research conducted by Moraes a significance value of 0.0318 < 0.05 (significance level of 5%).
et,al (2021) which shows that tax avoidance has negative results This means that managerial ownership has a negative and
on tax disclosure. This is different from the research conducted significant effect on Tax Disclosure in mining sector companies
by Hantoyo, (2016) and Larasati, (2019). Based on the results listed on the Indonesia Stock Exchange (IDX) for the period
of the study, it was concluded that tax avoidance has a positive 2019 - 2021. The results of this study are in line with the
effect on tax disclosure. legitimacy theory that ownership, management, and tax
disclosure have an important relationship. Significant
B. Profit Management Affects Tax Disclosure management ownership can encourage management to act more
Based on the test results showed that the second hypothesis responsibly and ethically in tax management, while proper and
was accepted. This is because based on partial testing (t-test) transparent tax disclosure helps strengthen a company's
the coefficient value (β) with a positive direction of -0.001893 legitimacy as a legitimate and trustworthy entity in the eyes of
and a significance value of 0.3127 > 0.05 (significance level of stakeholders. Management ownership in mining industry

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companies in Indonesia has been effective in monitoring expected that further researchers can expand the observations
corporate tax reporting. This is one of the reasons why studied so that they can find out the dominant factors in
ownership management affects tax disclosure. influencing Tax Disclosure. Researchers can then add the
research period and use the latest research period to make the
From Managerial Ownership the company can also make research more valid and up to date.Furthermore, the observation
the decision not to disclose taxes in order to get more income. year in this study was only carried out for three years, namely
found that in agency theory, CEO ownership serves to align the period 2019 – 2021. We recommend that further studies add
management behavior with shareholder interests (Kharisma &; years of observation so that the samples obtained are more
Rachman, 2017). Some studies have recognized a trade-off numerous and diverse or in other ways to multiply samples, this
between low levels of ownership that serve to align CEO is likely that the results of this study do not adequately describe
interests and larger levels of ownership that encourage CEO the conditions regarding the reputation of mining sector
strengthening, suggesting that the relationship between CEO companies in Indonesia.
ownership levels and interest alignment is not linear
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