Financial Performance and Tax Aggressiveness: Profitability, Liquidity, and Leverage in Green Economic Transition

DOI

10.2991/978-94-6463-758-8_100How to use a DOI?

Keywords

Profitability; Liquidity; Leverage; Tax Aggressiveness; Company Size; Green Economy; Financial Performance; Tax Planning

Abstract

This study investigates the influence of Profitability, Liquidity, and Leverage on Tax Aggressiveness among firms listed in the LQ45 index on the Indonesia Stock Exchange, with Company Size as a moderating variable. The research examines the dynamics of financial performance and tax strategies within the context of the global transition towards a green economy, which poses unique challenges for these prominent companies. The findings reveal that Profitability has a positive and significant effect on Tax Aggressiveness (t = 7.738, p < 0.001). Liquidity also shows a positive and significant impact on Tax Aggressiveness (t = 2.016, p = 0.048), indicating that firms with greater liquidity are more likely to engage in aggressive tax planning. Leverage similarly has a positive and significant influence on Tax Aggressiveness (t = 7.436, p < 0.001), suggesting that higher leverage enables companies to reduce tax liabilities through interest deductions. The results also suggest that larger companies, due to their resources and strategic capabilities, are better positioned to engage in complex tax planning. This study contributes to the literature by offering empirical insights into how financial performance impacts tax aggressiveness in a developing economy amidst evolving environmental regulations. The findings are expected to inform policymakers and corporate strategists on the trade-offs between financial performance and tax compliance in the era of green economic policies.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Dirham Dirham
AU  - Nuraeni Kadir
AU  - Dian A. S. Parawansa
PY  - 2025
DA  - 2025/07/30
TI  - Financial Performance and Tax Aggressiveness: Profitability, Liquidity, and Leverage in Green Economic Transition
BT  - Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024)
PB  - Atlantis Press
SP  - 1223
EP  - 1237
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-758-8_100
DO  - 10.2991/978-94-6463-758-8_100
ID  - Dirham2025
ER  -