Tax Avoidance, Risk, and Profitability Shaping Debt Costs in Emerging Market Manufacturing Companies Listed on IDX

Tania Fitri Ayu Ramadhan; Indrawati Mara Kesuma; Eri Triharyati; Dewi Anggraeni

doi:10.32503/jck.v5i2.9293

Tania Fitri Ayu Ramadhan Universitas Bina Insan
Indrawati Mara Kesuma Universitas Bina Insan http://orcid.org/0000-0002-7357-2021
Eri Triharyati Universitas Bina Insan
Dewi Anggraeni Universitas Bina Insan

DOI: https://doi.org/10.32503/jck.v5i2.9293

Abstract

Introduction/Main Objectives: This study examines whether tax avoidance, tax risk, and profitability affect the cost of debt of food and beverage manufacturing companies listed on the Indonesia Stock Exchange during 2020–2024. Novelty: The study integrates tax avoidance, tax risk, and profitability in one panel-data model and focuses on the food and beverage subsector during a period marked by post-pandemic financial adjustment. Research Methods: Secondary data were obtained from annual financial statements. Purposive sampling produced eight companies and 40 firm-year observations. Tax avoidance was proxied by Cash Effective Tax Rate (CETR), tax risk by the standard deviation of CETR, profitability by Return on Assets (ROA), and cost of debt by interest expense relative to total debt. The data were analyzed using panel regression with EViews 13 and a Fixed Effect Model. Finding/Results: Tax avoidance and tax risk do not have significant partial effects on the cost of debt, whereas profitability has a significant effect. The three variables jointly have a significant effect on the cost of debt. Conclusion: Creditors appear to assess financing risk more comprehensively, with profitability providing a stronger individual signal than the two tax-related variables.

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