Strengthen the role of the Board of Commissioners

Oct 13, 2025 by windailys.com 33 views

The Influence of the Board of Commissioners, the Audit Committee, and the Amount of Compensation for the Board of Commissioners and the Board of Directors on Tax Management in Manufacturing Companies Listed on the Indonesia Stock Exchange

Introduction

The management of taxes is a crucial aspect of a company's financial performance, and it is essential for companies to comply with tax regulations to avoid penalties and maintain a good reputation. In Indonesia, the tax management of manufacturing companies listed on the Indonesia Stock Exchange (IDX) is a significant concern for stakeholders, including investors, regulators, and the government. The Board of Commissioners, Audit Committee, and the amount of compensation for the Board of Commissioners and the Board of Directors play a vital role in tax management, and their influence on tax management is a topic of interest for researchers and practitioners.

Background

The Board of Commissioners is responsible for overseeing the company's management and ensuring that the company complies with laws and regulations, including tax regulations. The Audit Committee, on the other hand, is responsible for ensuring the integrity of financial statements and compliance with regulations. The amount of compensation for the Board of Commissioners and the Board of Directors can also influence their behavior and decision-making, including their approach to tax management.

Research Methodology

This study aims to reveal and analyze the influence of the Board of Commissioners, Audit Committee, and the amount of compensation received by the Board of Commissioners and the Board of Directors on Tax Management in Manufacturing Companies Listed on the Indonesia Stock Exchange (IDX) during the 2012 to 2014 period. The study used a purposive sampling method, where 39 companies were taken as samples for 3 years (2012-2014) with a total of 117 observations. The data used in this study were obtained through financial statements that have been audited by independent auditors, which can be accessed through the Indonesia Stock Exchange website at www.idx.com. The data analysis technique applied is multiple linear regression.

Analysis of Research Results

The results of this study showed that the Board of Commissioners partially had a significant positive influence on tax management. However, the audit committee and the amount of compensation received by the Board of Commissioners and the Board of Directors did not show a significant effect on tax management. On the other hand, the level of debt and profitability of the company turned out to have a significant negative influence on tax management.

The Role of the Board of Commissioners in Tax Management

The Board of Commissioners plays an important role in company tax management. With strict supervision, the Board of Commissioners can encourage management to comply with tax regulations and optimize company tax obligations. This creates better conditions for efficient tax planning, which in turn can improve the company's financial performance.

The Audit Committee and Tax Management

The Audit Committee, which is responsible for ensuring the integrity of financial statements and compliance with regulations, does not show a direct effect on tax management. This may reflect that although the audit function is important, the impact on the tax strategy is more indirect than the role of the Board of Commissioners.

The Amount of Compensation and Tax Management

It is essential to consider that high financial incentives for the Board of Commissioners and Directors do not always correlate with better tax management. This shows that compensation must be designed not only to encourage financial performance, but also to motivate appropriate decision making in terms of tax responsibility.

The Level of Debt and Profitability and Tax Management

The negative influence of the level of debt and profitability on tax management shows that the company that is very owed may face pressure to prioritize debt payments rather than fulfilling tax obligations. High profitability, although it is expected to generate more income for taxes, can also be a signal that the company will find ways to reduce their tax burden through tax planning strategies.

Conclusion

The results of this study provide important insights for stakeholders in manufacturing companies listed on the Indonesia Stock Exchange. Strengthening the role of the Board of Commissioners in tax management can be an effective strategy for increasing tax compliance and performance, as well as encouraging better decisions in terms of company financial management.

Recommendations

Based on the findings of this study, the following recommendations are made:

Strengthen the role of the Board of Commissioners: The Board of Commissioners should be given more authority and responsibility to oversee the company's tax management and ensure that the company complies with tax regulations.
Improve the audit function: The audit function should be improved to ensure that financial statements are accurate and comply with regulations.
Design compensation packages wisely: Compensation packages should be designed to motivate appropriate decision making in terms of tax responsibility, rather than just encouraging financial performance.
Monitor the level of debt and profitability: Companies should be monitored to ensure that they do not prioritize debt payments over tax obligations, and that they do not use tax planning strategies to reduce their tax burden.

Limitations of the Study

This study has several limitations, including:

Sample size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
Data availability: The data used in this study are limited to financial statements that have been audited by independent auditors, which may not reflect the company's actual tax management practices.
Methodology: The multiple linear regression technique used in this study may not be the most appropriate method for analyzing the influence of the Board of Commissioners, Audit Committee, and the amount of compensation on tax management.

Future Research Directions

Future research should aim to:

Increase the sample size: Future studies should aim to increase the sample size to improve the generalizability of the findings.
Use more comprehensive data: Future studies should use more comprehensive data, including tax returns and other financial statements, to get a more accurate picture of the company's tax management practices.
Use more advanced methodologies: Future studies should use more advanced methodologies, such as structural equation modeling, to analyze the influence of the Board of Commissioners, Audit Committee, and the amount of compensation on tax management.
Frequently Asked Questions (FAQs) about the Influence of the Board of Commissioners, the Audit Committee, and the Amount of Compensation on Tax Management in Manufacturing Companies Listed on the Indonesia Stock Exchange

Q: What is the role of the Board of Commissioners in tax management?

A: The Board of Commissioners plays an important role in company tax management. With strict supervision, the Board of Commissioners can encourage management to comply with tax regulations and optimize company tax obligations. This creates better conditions for efficient tax planning, which in turn can improve the company's financial performance.

Q: Why did the audit committee not show a direct effect on tax management?

A: The audit committee, which is responsible for ensuring the integrity of financial statements and compliance with regulations, does not show a direct effect on tax management. This may reflect that although the audit function is important, the impact on the tax strategy is more indirect than the role of the Board of Commissioners.

Q: What is the relationship between the amount of compensation and tax management?

A: It is essential to consider that high financial incentives for the Board of Commissioners and Directors do not always correlate with better tax management. This shows that compensation must be designed not only to encourage financial performance, but also to motivate appropriate decision making in terms of tax responsibility.

Q: How does the level of debt and profitability affect tax management?

A: The negative influence of the level of debt and profitability on tax management shows that the company that is very owed may face pressure to prioritize debt payments rather than fulfilling tax obligations. High profitability, although it is expected to generate more income for taxes, can also be a signal that the company will find ways to reduce their tax burden through tax planning strategies.

Q: What are the implications of the findings of this study for stakeholders in manufacturing companies listed on the Indonesia Stock Exchange?

A: The findings of this study provide important insights for stakeholders in manufacturing companies listed on the Indonesia Stock Exchange. Strengthening the role of the Board of Commissioners in tax management can be an effective strategy for increasing tax compliance and performance, as well as encouraging better decisions in terms of company financial management.

Q: What are the limitations of this study?

A: This study has several limitations, including:

Sample size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
Data availability: The data used in this study are limited to financial statements that have been audited by independent auditors, which may not reflect the company's actual tax management practices.
Methodology: The multiple linear regression technique used in this study may not be the most appropriate method for analyzing the influence of the Board of Commissioners, Audit Committee, and the amount of compensation on tax management.

Q: What are the future research directions for this study?

A: Future research should aim to:

Increase the sample size: Future studies should aim to increase the sample size to improve the generalizability of the findings.
Use more comprehensive data: Future studies should use more comprehensive data, including tax returns and other financial statements, to get a more accurate picture of the company's tax management practices.
Use more advanced methodologies: Future studies should use more advanced methodologies, such as structural equation modeling, to analyze the influence of the Board of Commissioners, Audit Committee, and the amount of compensation on tax management.

Q: What are the practical implications of this study for companies listed on the Indonesia Stock Exchange?

A: The findings of this study have several practical implications for companies listed on the Indonesia Stock Exchange. Companies should:

Strengthen the role of the Board of Commissioners: Companies should give more authority and responsibility to the Board of Commissioners to oversee the company's tax management and ensure that the company complies with tax regulations.
Improve the audit function: Companies should improve the audit function to ensure that financial statements are accurate and comply with regulations.
Design compensation packages wisely: Companies should design compensation packages that motivate appropriate decision making in terms of tax responsibility, rather than just encouraging financial performance.
Monitor the level of debt and profitability: Companies should monitor the level of debt and profitability to ensure that they do not prioritize debt payments over tax obligations, and that they do not use tax planning strategies to reduce their tax burden.