Intellectual Capital and Investment Efficiency:Tax Avoidance Analysis
Renny Wulandari (a), Bambang Tjahjadi (b)

Fakultas Ekonomi Universitas Airlangga

Abstract

Purpose - Tax avoidance can help companies reduce their tax burden, increasing the cash flow available for investment. Therefore, it is important to understand how tax avoidance affects the allocation of resources for corporate investment. This study examines the moderation of intellectual capital. Intellectual capital can influence a firm^s ability to identify, evaluate, and manage investment projects well. Companies with strong intellectual capital may better identify profitable investment opportunities and manage them efficiently.

Design/methodology/approach- This study examined 119 manufacturing companies for nine years (2011-2019), obtaining 1.070 observations. The independent variable was investment efficiency, and the independent variable was tax avoidance. The moderating variable is the intellectual capital component (Human: human capital efficiency [HCE]- Structural: structural capital efficiency [SCE]- and Physical/Financial: efficiency of capital employed [CEE]). In addition, this study utilizes three control variables- this study used moderated regression analysis.

Findings Based on the results of the regression analysis, it was found that tax avoidance positively affects investment efficiency. And intellectual capital negatively moderates to the effect of tax avoidance on investment efficiency. Discussions, contributions, and limitations are also offered by this study.

Keywords: tax avoidance- investment efficiency- intellectual capital- agency theory.

Topic: Taxation