Effect of Leverage, Size, and Derivatives on Tax Avoidance in Indonesian Manufacturing Firms

Abstract

This study aims to examine the effect of leverage, company size, and financial derivatives on tax avoidance among manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2019–2023 period. The research employs a quantitative approach using secondary data obtained from annual financial reports. The population consists of 120 manufacturing companies, while the sample includes 16 companies selected through purposive sampling based on predetermined criteria. Data were analyzed using multiple linear regression to determine both the simultaneous and partial effects of the independent variables on tax avoidance. The findings indicate that leverage, company size, and financial derivatives simultaneously have a significant effect on tax avoidance. Partially, leverage has a significant positive effect, indicating that companies with higher debt levels tend to engage in greater tax avoidance practices. In contrast, company size and financial derivatives have significant negative effects, suggesting that larger companies and firms utilizing financial derivatives are less likely to engage in tax avoidance activities.