FIRMS’ RESPONS ON TAX REFORM: EVIDENCE FROM INDONESIAN CAPITAL MARKET
Abstract
The purpose of this study was examine and analyze indications of earnings management
undertaken by property and real estate companies before and after implementation of new tax
law. It also examine and analyze the influence of taxes and non-tax factor on earnings
management.
The author uses window period two years before and two years after implementation of
new tax law. Population of this research is property and real estate companies listed on Indonesia
Stock Exchange. Thirty two companies are taken as sample.
The result of Paired Sample T-Test shows that the discretionary accrual before and after
implementation of new tax law statistically different. This implies that property and real estate
companies are indicated take earnings management. In additional, panel data regression test
results shows that earnings management are influenced by tax and non-tax factors. This result
gives support for positive accounting theory that political cost affected motivation of earnings
management.