IJSTR

International Journal of Scientific & Technology Research

Home About Us Scope Editorial Board Blog/Latest News Contact Us
0.2
2019CiteScore
 
10th percentile
Powered by  Scopus
Scopus coverage:
Nov 2018 to May 2020

CALL FOR PAPERS
AUTHORS
DOWNLOADS
CONTACT

IJSTR >> Volume 9 - Issue 2, February 2020 Edition



International Journal of Scientific & Technology Research  
International Journal of Scientific & Technology Research

Website: http://www.ijstr.org

ISSN 2277-8616



The Mediating Role Of Disclosure Quality In The Relationship Between IFRS Convergence And Profit Shifting: A Study Of Multinational Corporations In Indonesia

[Full Text]

 

AUTHOR(S)

Fatmasari Sukesti, Imam Ghozali, Fuad

 

KEYWORDS

dislosure quality, IFRS convergence, profit shifting, multinational companies.

 

ABSTRACT

Base Erosion and Profit Shifting (BEPS) issues have attracted many researches throughout the world. BEPS activities could reduce tax revenues for countries that apply normal or high tax rates in their taxation systems, and could also encourage the creation of injustice in the global economy. The aim of this study was to examine the mediation role of dislosure quality in the relationship between IFRS convergence and profit shifting studies in multinational companies in Indonesia. The research used panel data with 63 samples of multinational corporations listed on the Indonesia Stock Exchange 2012-2016 and tested the samples with Eviews program statistics tool. The results of the test conducted on direct relationship between IFRS convergence and profit shifting showed that implementation of IFRS convergence in Indonesia had a negative influence and significant effect on profit shifting. The results of the tests on the indirect relationship showed that IFRS convergence had significant affect to the improvement of disclosure quality, the disclosure quality had positif impact and significant effect on profit shifting. Thus the mediation role of disclosure quality have not been proven in this study. R2 showed an effect of 73,4% from the independent variable while other influences were caused by other variables.

 

REFERENCES

[1] An, Z.,& Tan, C. (2014). Taxation and income shifting: Empirical evidence from a quasi-experiment in China. Economic Systems, 38, 588 – 596.
[2] Barron, O.E.,& Qu, H. (2014). Information asymmetry and the ex ante impact of public disclosure quality on price efficiency and the cost of capital: evidence from a laboratory market. The Accounting Review, 89 (4), 1269 – 1297.
[3] Barth, M.E., Landsman, W.R., Lang, M., & William, C. (2012). Are IFRS-based and US GAAP-based accounting amounts comparable? Journal of Accounting and Economics, 54, 68 – 93.
[4] Bazrafshan, E., Kandelousi, A.S., & Hooy, C.W. (2015). The impact of earning management on the extend of disclosure and true financial performance: evidence from listed firms in Hongkong. Accepted Manuscript for The British Accounting Review.
[5] Blouin, J.L., Gleason, C.A., Mills, L.F., & Sikes, S.A. (2010). Pre-emping disclosure? firms’ decisions prior to FIN No. 48. The Accounting Review, 85 (3), 791 – 815.
[6] Borkowski, S.C., & Gaffney, M.A. (2012). FIN 48, uncertainty and transfer pricing : (Im) Perfect together?. Journal of International Accounting, Auditing and Taxation, 21, 3 – 51
[7] Chen, M.C., & Tsai, Y.C. (2010). Earning management types and motivation; A study in Taiwan. Social Behavior and Personality, 38 (7), 955.
[8] DeFond, M., Hu, X., Hung, M., & Li, S. (2011). The Impact of mandatory IFRS adoption on foreign mutual fund ownership: The role of comparability. Journal of Accounting and Economics, 51, 240 – 258.
[9] Desai, M.A., & Dharmapala, D. (2009). Taxes, institutions and foreign diversification opportunities. Journal of Public Economics, 93, 703 – 714.
[10] De Simone, L.N. (2013). Does a Common Set of Accounting Standards Affect Tax-Motivated Income Shifting for Multinational Firms. Dissertation. The University of Texas at Austin
[11] Dharmapala, D., & Riedel, N. (2013). Earning shocks and tax-motivated income shifting:Evidence from European multinationals. Journal of Public Economics 97, 95 – 107.
[12] Ding, Y., Hope, O.K., & Jeanjean, T. (2007). Differences between domestic accounting standards and IAS: Measurement, determinant and implications. Journal of Accounting and Public Policy, 26,1 – 38.
[13] Doukakis, L.C. (2010). The persistence of earnings and earnings components after the adoption of IFRS. Managerial Finance, 36 (11), 969 – 980.
[14] El Diri, M. (2018). Introduction to earnings management. Springer International Publishing.
[15] Fan, J.P.H. & Wong, T.J. (2002). Corporate ownership structure and the informativeness of accounting earnings in East Asia. Journal of Accounting andd Economics No. 33, 401 - 425
[16] Gao, P. (2010). Disclosure quality, cost of capital, and investor welfare. The Accounting Review, 85 (1), 1 – 29.
[17] Gilson, R.J. & Gordon, J.N. (2003). Doctrines And Markets; Controlling Controlling Shareholders. University of Pennylvania Law Review, 15, 785
[18] Grubert, H. & Mutti, J. (1991). Taxes, tariffs and transfer pricing in multinational corporate decision making. The Review of Economics and Statistics, 73 (2), 285 – 293.
[19] Hastuti, T.D. (2017). Pengaruh penerapan standar akuntansi berbasis IFRS dan siklus hidup perusahaan terhadap manajemen laba dengan pengendalian internal sebagai variabel moderasi. Disertasi. Universitas Diponegoro Semarang Indonesia.
[20] Hines, J.R. & Rice, M. (1994). Fiscal paradise: foreign tax havens and American business. The Quarterly Journal of Economics, 109 (1), 149 – 182.
[21] Jeanjean, T., & Stolowy, H. (2008). Do accounting standards matter? An exploratory analysis of earnings management before and after IFRS adoption. Journal Accounting and Public Policy, 27, 480 – 494.
[22] Jensen, M.C. & Meckling, W.H. (1976). Theory of Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, Vol. 3. No. , 305 – 360.
[23] Karampinis, N.I., & Hevas, D.L. (2013). Effects of IFRS adoption on tax-induced incentives for financial earnings management: Evidence from Greece. The International Journal of Accounting, 48, 218 – 247.
[24] Krautheim, S., & Eisenlohr, T.S. (2011). Heterogeneous firms, ‘profit shifting’ FDI and international tax competition. Journal of Public Economics, 95, 122 – 133.
[25] Kristiaji, B.B. (2015). Incentive and disincentive of profit shifting in developing countries. Thesis. International Business Tax Economics Intra Jurisdictional Competition, Tilburg School of Economics and Management Tilburg University.
[26] Lobo, G.J., & Zhou, J. (2001). Disclosure quality and earnings management. Asia-Pacific Journal of Accounting and Economics,8 (1), 1 – 20.
[27] Mardini, G.H., Crawford, L., & Power, D.M. (2012). The impact of IFRS 8 on disclosure practices of Jordanian listed companies. Journal of Accounting in Emerging Economics, 2 (1), 67 – 90.
[28] Mensah, B.K.A. (2013). Adoption of International Financial Reporting Standards (IFRS) in Ghana and the quality of financial statement disclosure. International Journal of Accounting and Financial Reporting, 3 (2).
[29] Merkley, K. (2014). Narrative disclosure and earnings management performance: evidence from R&D disclosure. The Accounting Review, 89 (2), 725 – 757.
[30] Neel. M.J. (2011). International Financial Reporting Standards (IFRS) and the institutional environment : their joint impact on accounting comparability. Dissertation
[31] Noh, M., Moon, D., Guiral, A., & Esteban, L.P. (2014). Earnings management using income classification shifting evidence from the Korean IFRS adoption period. https://www.uts.edu.au/sites/default/files/JCAE_MNoh_EarningManagementUsingIncomeClassificationShifting.pdf
[32] Nouri, Y., & Abaoub, E. (2015). Earnings management and analyst coverage change around IFRS implementation: evidence from France. International Journal of Business and Finance Research, 9 (3).
[33] Nulla, Y.M. (2014). Does IFRS adoption influence financial reporting? An empirical study on financial institutions. Journal of Business and Management, 20 (1).
[34] OECD. (2013). Action plan on base erosion and profit shifting. OECD Publishing. http://dx.doi.org/10.1787/9789264202719-en.
[35] Omar, N., & Zolkaflil, S. (2015). Profit shifting and earnings management through tax haven subsidiaries: an exploratory analysis of multinational companies. Procedia Economics and Finance, 28, 53 – 58.
[36] Phillips, R., Wamhoff, S., Smith, D. (2014). Offshore shell games 2014: The use of offshore tax havens by fortune 500 Companies. U.S. Public Interest Research Group Education Fund (U.S. PIRG Education Fund).
[37] Pour, S.H., & Arabi. (2015). The effect of voluntary disclosure on relationship between accrual quality and information asymmetry. Journal of Life Science and Biomedicine, 5(1), 15 – 20.
[38] Richardson, G., & Taylor, G. (2014). Income shifting incentive and tax haven utilization: evidence from multinational U.S. firms. The International Journal of Accounting.
[39] Sikka, P., & Willmott, H. (2010). The dark side of transfer pricing: Its role in tax avoidance and wealth retentiveness. Critical Perspectives on Accounting, 21, 342 – 356.
[40] Sun, Yan. (2010). Do MD&A disclosure help users interpret disproportionate inventory increases? The Accounting Review, 85 (4), 1411 – 1440.
[41] Tendeloo, B, & Vanstraelen. (2005). Earning management under German GAAP versus IFRS. European Accounting Review, 14 (1), 155 – 180.
[42] Villonga, B., & Amit, R. (2006). How do family ownership, control and management affect firm value? Journal of Financial Economic. 80, 385 – 417.
[43] Zeghal, D., Chtourou, S., & Sellami, Y.M. (2011). An analysis of the effect of mandatory adoption of IAS/IFRS on earnings management. Journal of International Accounting Auditing and Taxation, 20, 61 – 72.