THE EFFECT OF DERIVATIVE TRANSACTION ON PROFITS MANAGEMENT: THE MODERATING TESTING OF TAX AVOIDANCE Suhendra Doctoral Student in Accounting, Trisakti University, Indonesia Universitas Budhi Dharma, Tangerang, Indonesia Etty Murwaningsari Sekar Mayangsari Susi Dwi Mulyani Lecturers of Universitas Trisakti, Jakarta, Indonesia Received: 14 March 2020 Revised and Accepted: 8 July 2020 ABSTRACT: This study aims to examine and analyze the effect of the derivative transaction and tax avoidance on profits management of the non-financial firms listed on the stock exchange of Indonesia and the stock exchange of Thailand from 2013 until 2017 by employing firm size and growth as the control variable. This situation opens the opportunity to prove tax avoidance as the moderating variable becoming the novelty. Furthermore, tax avoidance and profits management get calculated by the book-tax difference and the residual of the Jaggi modified model, respectively. By considering these observed proxies, this study utilizes the regression model with pooled data to examine the proposed research hypotheses. Once testing the data and analyzing the result of hypotheses testing, this study concludes that derivative transaction becomes the reason for the firms to manage their profits. Surprisingly, when they comply with tax rule, the positive tendency of transacting derivative on earning management can get reduced. KEYWORDS: corporate tax avoidance, derivative transactions, earnings management, residual of modified Jaggi model.
Oleh :
Susi Dwimulyani
