Tax Aggressiveness, Debt Maturity Structure, and Firm Performance in Indonesian Real Estate Firms: The Moderating Role of Audit Quality

https://doi.org/10.35912/ahrmr.v5i1.3783
Published: Mar 31, 2025

Abstract:

Purpose: This study examines whether tax aggressiveness and debt maturity structure affect firm performance in Indonesia’s listed real estate and property companies, and whether audit quality can reduce the negative impact of tax aggressiveness, especially when refinancing pressure is high.

Research Methodology: The study focuses on real estate and property firms listed on the Indonesia Stock Exchange (IDX), The analysis can be implemented in Stata or equivalent econometric software.

Results: The findings indicate that firm performance is persistent over time. Tax aggressiveness shows a nonlinear (inverted-U) relationship with performance: moderate tax aggressiveness is associated with higher profitability, while excessive tax aggressiveness reduces performance. A higher short-term debt ratio is negatively related to firm performance.

Conclusions: Tax strategies in Indonesian real estate firms cannot be evaluated in isolation. Moderate tax aggressiveness may support performance through cash savings, but excessive aggressiveness can destroy value when uncertainty and information risk increase. Firms with high refinancing pressure face stronger downside effects from aggressive tax behavior..

Limitations: The study relies on archival proxies (e.g., CETR for tax aggressiveness and Big 4 affiliation for audit quality), which may not fully capture managerial intent or the full spectrum of audit effectiveness

Contribution: This study contributes to corporate finance, accounting, and governance research by integrating tax behavior, debt maturity risk, and audit quality within a dynamic panel framework in an emerging-market setting.

Keywords:
1. Audit Quality
2. Cash Effective Tax Rate
3. Debt Maturity
4. Firm Performance
5. Refinancing Risk
6. Tax Aggressiveness
Authors:
Nurwita Nurwita
Universitas Pamulang, Banten, Indonesia
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Nurwita, N. (2025). Tax Aggressiveness, Debt Maturity Structure, and Firm Performance in Indonesian Real Estate Firms: The Moderating Role of Audit Quality. Annals of Human Resource Management Research, 5(1), 223–234. https://doi.org/10.35912/ahrmr.v5i1.3783
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Vol. 5 No. 1 (2025): March
Articles
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References

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    Adams, M. T., Inger, K. K., Meckfessel, M. D., & Maher, J. J. (2024). Tax-related Restatements and Tax Avoidance Behavior. Journal of Accounting, Auditing & Finance, 39(4), 951-979. doi:https://doi.org/10.1177/0148558X221115482?urlappend=%3Futm_source%3Dresearchgate.net%26utm_medium%3Darticle

    Agbo, E., & Egbunike, C. (2024). CEO Political Connection, Shareholding and Financial Distress of Deposit Money Banks in Nigeria. International Journal of Financial, Accounting, and Management, 6(1), 135-149. doi:10.35912/ijfam.v6i1.1649

    Ai, H., Frank, M. Z., & Sanati, A. (2020). The Trade-off Theory of Corporate Capital Structure. doi:https://doi.org/10.1093/acrefore/9780190625979.013.602

    Alamry, S. J. M., Al-Attar, H. A., & Salih, A. S. (2022). The Effect of Using the Balanced Scorecard (BSC) on Reducing the Financial and Administrative Corruption in Iraqi Government Units. International Journal of Financial, Accounting, and Management, 4(1), 67-83. doi:10.35912/ijfam.v4i1.732

    Balakrishnan, K., Blouin, J. L., & Guay, W. R. (2019). Tax Aggressiveness and Corporate Transparency. The accounting review, 94(1), 45-69. doi:https://dx.doi.org/10.2139/ssrn.1792783

    Brühne, A. I., & Schanz, D. (2022). Defining and Managing Corporate Tax Risk: Perceptions of Tax Risk Experts. Contemporary Accounting Research, 39(4), 2861-2902. doi:https://doi.org/10.1111/1911-3846.12785

    Dhawan, A., Ma, L., & Kim, M. H. (2020). Effect of Corporate Tax Avoidance Activities on Firm Bankruptcy Risk. Journal of Contemporary Accounting & Economics, 16(2), 100187. doi:https://doi.org/10.1016/j.jcae.2020.100187

    Ebrahimi, T., & Al?Najjar, B. (2025). Financial Flexibility and the Persistence of Extreme Financial Leverage Policies: A New Empirical Approach. Financial Markets, Institutions & Instruments, 34(2), 85-108. doi:https://doi.org/10.1111/fmii.12211

    Florio, C. (2024). A Structured Literature Review of Empirical Research on Mandatory Auditor Rotation. Journal of International Accounting, Auditing and Taxation, 55, 100623. doi:https://doi.org/10.1016/j.intaccaudtax.2024.100623

    Francis, J. R. (2023). Going Big, Going Small: A Perspective on Strategies for Researching Audit Quality. The British Accounting Review, 55(2), 101167. doi:https://doi.org/10.1016/j.bar.2022.101167

    Ghabri, Y. (2022). Legal Protection Systems, Corporate Governance and Firm Performance: A Cross-Country Comparison. Studies in Economics and Finance, 39(2), 256-278. doi:https://doi.org/10.1108/SEF-09-2021-0404

    Hanlon, M., & Heitzman, S. (2022). Corporate Debt and Taxes. Annual Review of Financial Economics, 14(1), 509-534. doi:https://doi.org/10.1146/annurev-financial-101221-103806

    Haripin, H., Indraprakoso, D., Wibisono, G., & Utomo, H. (2025). Understanding fintech excellence: A scholarly Review of the Diploma Fintech Model for Effective Global Implementation. International Journal of Financial, Accounting, and Management, 7(3), 387-406. doi:10.35912/ijfam.v7i3.2825

    Hasan, M. M., Lobo, G. J., & Qiu, B. (2021). Organizational Capital, Corporate Tax Avoidance, and Firm Value. Journal of Corporate Finance, 70, 102050. doi:https://doi.org/10.1016/j.jcorpfin.2021.102050

    Hutahean, T. P., Hermawan, W., Kharisma, B., & Hasanah, A. (2024). Debt and Debt Tax Benefit: Evidence from Indonesia Debt-To-Equity Cap Reform. Journal of Economics and Business, 132, 106217. doi:https://doi.org/10.1016/j.jeconbus.2024.106217

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    Kidwell, R. E., Eddleston, K. A., Kidwell, L. A., Cater, J. J., & Howard, E. (2024). Families and Their Firms Behaving Badly: A Review of Dysfunctional Behavior in Family Businesses. Family Business Review, 37(1), 89-129. doi:https://doi.org/10.1177/08944865241226739

    Lee, C.-H., & Bose, S. (2021). Do Family Firms Engage in Less Tax Avoidance than Non-family Firms? The Corporate Opacity Perspective. Journal of Contemporary Accounting & Economics, 17(2), 100263. doi:https://doi.org/10.1016/j.jcae.2021.100263

    Mgammal, M. H. (2020). Corporate Tax Planning and corporate Tax Disclosure. Meditari Accountancy Research, 28(2), 327-364. doi:https://doi.org/10.1108/MEDAR-11-2018-0390

    Müller, R., Spengel, C., & Vay, H. (2020). On the Determinants and Effects of Corporate Tax Transparency: Review of an Emerging Literature. doi:https://dx.doi.org/10.2139/ssrn.3736747

    Neuman, S. S., Omer, T. C., & Schmidt, A. P. (2020). Assessing Tax Risk: Practitioner Perspectives. Contemporary Accounting Research, 37(3), 1788-1827. doi:https://doi.org/10.1111/1911-3846.12556?urlappend=%3Futm_source%3Dresearchgate.net%26utm_medium%3Darticle

    Okigbo, F. C., Mbamalu, S., & Iruogu, K. (2025). Digital Marketing Transformation through Artificial Intelligence: A Study of Nigerian Small Businesses. International Journal of Financial, Accounting, and Management, 7(3), 419-433. doi:10.35912/ijfam.v7i3.3383

    Omori, K., & Kitamura, T. (2020). Effect of debt tax benefits on corporate pension funding and risk-taking. Journal of Economic Studies, 47(6), 1327-1337. doi:10.1108/JES-04-2019-0188

    Pervin, M. T., & Begum, R. (2022). Engaging Employees in Management and Decision-Making Process: A Case Study on “Vision Garments Limited”. Annals of Human Resource Management Research, 2(1), 71-85. doi:10.35912/ahrmr.v2i1.1225

    Sánchez-Ballesta, J. P., & Yagüe, J. (2023). Tax avoidance and the cost of debt for SMEs: Evidence from Spain. Journal of Contemporary Accounting & Economics, 19(2), 100362. doi:https://doi.org/10.1016/j.jcae.2023.100362

    Shin, Y., & Park, J. (2022). Differences in Tax Avoidance According to Corporate Sustainability with A Focus on Delisted Firms. Sustainability, 14(11), 6648. doi:https://doi.org/10.3390/su14116648

    Sulaiman, N. A. (2023). External Audit Quality: Its Meaning, Representations and potential conflict in Practice. Accounting, Auditing & Accountability Journal, 36(5), 1417-1440. doi: 10.1108/AAAJ-02-2020-4443

    Syofya, H. (2022). Modeling Analysis of Economic Growth in Asia with a Dynamic Panel Approach Generalized Method of Moment (GMM). IJEBD (International Journal of Entrepreneurship and Business Development), 5(4), 716-725. doi:https://doi.org/10.29138/ijebd.v5i4.1900

    Wang, S., Wang, X., & Xu, L. (2023). Debt Maturity Structure and the Quality of Risk Disclosures. Journal of Corporate Finance, 83, 102503. doi:https://doi.org/10.1016/j.jcorpfin.2023.102503

  1. Adachi-Sato, M., & Vithessonthi, C. (2019). Corporate Debt Maturity and Future Firm Performance Volatility. International Review of Economics & Finance, 60, 216-237. doi:https://doi.org/10.1016/j.iref.2018.11.001
  2. Adams, M. T., Inger, K. K., Meckfessel, M. D., & Maher, J. J. (2024). Tax-related Restatements and Tax Avoidance Behavior. Journal of Accounting, Auditing & Finance, 39(4), 951-979. doi:https://doi.org/10.1177/0148558X221115482?urlappend=%3Futm_source%3Dresearchgate.net%26utm_medium%3Darticle
  3. Agbo, E., & Egbunike, C. (2024). CEO Political Connection, Shareholding and Financial Distress of Deposit Money Banks in Nigeria. International Journal of Financial, Accounting, and Management, 6(1), 135-149. doi:10.35912/ijfam.v6i1.1649
  4. Ai, H., Frank, M. Z., & Sanati, A. (2020). The Trade-off Theory of Corporate Capital Structure. doi:https://doi.org/10.1093/acrefore/9780190625979.013.602
  5. Alamry, S. J. M., Al-Attar, H. A., & Salih, A. S. (2022). The Effect of Using the Balanced Scorecard (BSC) on Reducing the Financial and Administrative Corruption in Iraqi Government Units. International Journal of Financial, Accounting, and Management, 4(1), 67-83. doi:10.35912/ijfam.v4i1.732
  6. Balakrishnan, K., Blouin, J. L., & Guay, W. R. (2019). Tax Aggressiveness and Corporate Transparency. The accounting review, 94(1), 45-69. doi:https://dx.doi.org/10.2139/ssrn.1792783
  7. Brühne, A. I., & Schanz, D. (2022). Defining and Managing Corporate Tax Risk: Perceptions of Tax Risk Experts. Contemporary Accounting Research, 39(4), 2861-2902. doi:https://doi.org/10.1111/1911-3846.12785
  8. Dhawan, A., Ma, L., & Kim, M. H. (2020). Effect of Corporate Tax Avoidance Activities on Firm Bankruptcy Risk. Journal of Contemporary Accounting & Economics, 16(2), 100187. doi:https://doi.org/10.1016/j.jcae.2020.100187
  9. Ebrahimi, T., & Al?Najjar, B. (2025). Financial Flexibility and the Persistence of Extreme Financial Leverage Policies: A New Empirical Approach. Financial Markets, Institutions & Instruments, 34(2), 85-108. doi:https://doi.org/10.1111/fmii.12211
  10. Florio, C. (2024). A Structured Literature Review of Empirical Research on Mandatory Auditor Rotation. Journal of International Accounting, Auditing and Taxation, 55, 100623. doi:https://doi.org/10.1016/j.intaccaudtax.2024.100623
  11. Francis, J. R. (2023). Going Big, Going Small: A Perspective on Strategies for Researching Audit Quality. The British Accounting Review, 55(2), 101167. doi:https://doi.org/10.1016/j.bar.2022.101167
  12. Ghabri, Y. (2022). Legal Protection Systems, Corporate Governance and Firm Performance: A Cross-Country Comparison. Studies in Economics and Finance, 39(2), 256-278. doi:https://doi.org/10.1108/SEF-09-2021-0404
  13. Hanlon, M., & Heitzman, S. (2022). Corporate Debt and Taxes. Annual Review of Financial Economics, 14(1), 509-534. doi:https://doi.org/10.1146/annurev-financial-101221-103806
  14. Haripin, H., Indraprakoso, D., Wibisono, G., & Utomo, H. (2025). Understanding fintech excellence: A scholarly Review of the Diploma Fintech Model for Effective Global Implementation. International Journal of Financial, Accounting, and Management, 7(3), 387-406. doi:10.35912/ijfam.v7i3.2825
  15. Hasan, M. M., Lobo, G. J., & Qiu, B. (2021). Organizational Capital, Corporate Tax Avoidance, and Firm Value. Journal of Corporate Finance, 70, 102050. doi:https://doi.org/10.1016/j.jcorpfin.2021.102050
  16. Hutahean, T. P., Hermawan, W., Kharisma, B., & Hasanah, A. (2024). Debt and Debt Tax Benefit: Evidence from Indonesia Debt-To-Equity Cap Reform. Journal of Economics and Business, 132, 106217. doi:https://doi.org/10.1016/j.jeconbus.2024.106217
  17. Jin, F., Lee, L.-f., & Yu, J. (2021). Sequential and Efficient gmm Estimation of Dynamic Short Panel Data Models. Econometric Reviews, 40(10), 1007-1037. doi:https://doi.org/10.1080/07474938.2021.1889178
  18. Kidwell, R. E., Eddleston, K. A., Kidwell, L. A., Cater, J. J., & Howard, E. (2024). Families and Their Firms Behaving Badly: A Review of Dysfunctional Behavior in Family Businesses. Family Business Review, 37(1), 89-129. doi:https://doi.org/10.1177/08944865241226739
  19. Lee, C.-H., & Bose, S. (2021). Do Family Firms Engage in Less Tax Avoidance than Non-family Firms? The Corporate Opacity Perspective. Journal of Contemporary Accounting & Economics, 17(2), 100263. doi:https://doi.org/10.1016/j.jcae.2021.100263
  20. Mgammal, M. H. (2020). Corporate Tax Planning and corporate Tax Disclosure. Meditari Accountancy Research, 28(2), 327-364. doi:https://doi.org/10.1108/MEDAR-11-2018-0390
  21. Müller, R., Spengel, C., & Vay, H. (2020). On the Determinants and Effects of Corporate Tax Transparency: Review of an Emerging Literature. doi:https://dx.doi.org/10.2139/ssrn.3736747
  22. Neuman, S. S., Omer, T. C., & Schmidt, A. P. (2020). Assessing Tax Risk: Practitioner Perspectives. Contemporary Accounting Research, 37(3), 1788-1827. doi:https://doi.org/10.1111/1911-3846.12556?urlappend=%3Futm_source%3Dresearchgate.net%26utm_medium%3Darticle
  23. Okigbo, F. C., Mbamalu, S., & Iruogu, K. (2025). Digital Marketing Transformation through Artificial Intelligence: A Study of Nigerian Small Businesses. International Journal of Financial, Accounting, and Management, 7(3), 419-433. doi:10.35912/ijfam.v7i3.3383
  24. Omori, K., & Kitamura, T. (2020). Effect of debt tax benefits on corporate pension funding and risk-taking. Journal of Economic Studies, 47(6), 1327-1337. doi:10.1108/JES-04-2019-0188
  25. Pervin, M. T., & Begum, R. (2022). Engaging Employees in Management and Decision-Making Process: A Case Study on “Vision Garments Limited”. Annals of Human Resource Management Research, 2(1), 71-85. doi:10.35912/ahrmr.v2i1.1225
  26. Sánchez-Ballesta, J. P., & Yagüe, J. (2023). Tax avoidance and the cost of debt for SMEs: Evidence from Spain. Journal of Contemporary Accounting & Economics, 19(2), 100362. doi:https://doi.org/10.1016/j.jcae.2023.100362
  27. Shin, Y., & Park, J. (2022). Differences in Tax Avoidance According to Corporate Sustainability with A Focus on Delisted Firms. Sustainability, 14(11), 6648. doi:https://doi.org/10.3390/su14116648
  28. Sulaiman, N. A. (2023). External Audit Quality: Its Meaning, Representations and potential conflict in Practice. Accounting, Auditing & Accountability Journal, 36(5), 1417-1440. doi: 10.1108/AAAJ-02-2020-4443
  29. Syofya, H. (2022). Modeling Analysis of Economic Growth in Asia with a Dynamic Panel Approach Generalized Method of Moment (GMM). IJEBD (International Journal of Entrepreneurship and Business Development), 5(4), 716-725. doi:https://doi.org/10.29138/ijebd.v5i4.1900
  30. Wang, S., Wang, X., & Xu, L. (2023). Debt Maturity Structure and the Quality of Risk Disclosures. Journal of Corporate Finance, 83, 102503. doi:https://doi.org/10.1016/j.jcorpfin.2023.102503