THE EFFECT OF CEO’S PUBLICITY AND EXECUTIVE PREFERENCE RISK TOWARDS TAX AVOIDANCE WITH AUDIT COMMITTEE AS THE MODERATING VARIABLE

Abstract

This paper examines the effect of CEO's publicity and executive preference risk tendencies regarding corporate tax avoidance. Moreover, it aims to test the moderating effect of audit committee size on the relationship between CEO's publicity and tax avoidance as well as the relationship between executive preference risk and tax avoidance. By using a sample from real estate and property sector as well as mining sector that were listed on Indonesia Stock Exchange with research observation from the period 2017–2021, the findings indicate support for our hypotheses. Specifically, CEO's publicity is positively related to tax avoidance. Publicity gain by investor attention is considered a personality trait that causes CEOs to implement tax avoidance strategies. Executive preference risk is positively related to tax avoidance. Executive who has characteristic as risk taker causes executive to implement Tax avoidance strategies. However, this discretional behavior is constrained by audit committee size. Firms with larger audit committees help to control the consequences of CEO and executive on tax avoidance. Therefore, audit committee effectiveness is critical in monitoring managerial decisions related to tax avoidance.