Abstract:
This study aims to evaluate the effect of diversification strategy on tax
aggressiveness, with board director's incentive as the moderating variable. Utilizing
secondary data obtained from the annual reports of manufacturing companies listed
on the Indonesia Stock Exchange (IDX) during the period 2019–2023, this research
measures diversification strategy using the Herfindahl Index (HERF) and tax
aggressiveness using the Effective Tax Rate (ETR) as a proxy. Board director's
incentive are calculated based on the natural logarithm of total remuneration. The
data were analyzed using the Moderated Regression Analysis (MRA) method. The
findings indicate that diversification strategy has a significant negative effect on tax
aggressiveness, and board director's incentive strengthen this negative relationship.
These results highlight the importance of effective diversification management and
appropriate incentive schemes in controlling corporate tax aggressiveness.
