Foreign Investor’s Interest and Tax Avoidance: Contingency Perspectives Depended on Country’s Protection Level and Law Systems

  • Dielanova Wynni Yuanita Universitas Gadjah Mada
  • Christine Novita Dewi Duta Wacana Christian University
  • Arief Zuliyanto Susilo Yogyakarta State University
  • Kusharyanti Kusharyanti UPN Veteran Yogyakarta
Keywords: foreign investor, tax avoidance, investor protection level, law systems, contingency

Abstract

This study investigates differences in firms’ tax avoidances between multinational and national. Furthermore, it investigates the differences between firms’ contingent behavior because of the country’s investor protection level and law systems. This research takes into account the firms’ tax avoidance phenomenon. Besides that, it proposes novelties as follows. First, this study highlights that multinational firms tend to avoid taxes higher than national ones. Second, it induces the dividend catering theory related to the country’s investor protection. The latest, it persuades that country’s investor protection, and law systems make firms contingent on their tax avoidance behaviors. This study finds that firms where they live in high investors’ protection countries and common law did higher tax avoidance than others. The findings imply that these firms could grow higher than others. It means that this study suggests economic consequences. The consequence is that a country should increase its investors’ protection level and somehow redefine its law systems. Therefore, it could enhance its capital market and subsequently improve the national welfares.

Author Biographies

Dielanova Wynni Yuanita, Universitas Gadjah Mada

Graduate School of Asia Paficif Studies

Arief Zuliyanto Susilo, Yogyakarta State University

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References

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Published
2020-05-28
How to Cite
Yuanita, D. W., Dewi, C. N., Susilo, A. Z., & Kusharyanti, K. (2020). Foreign Investor’s Interest and Tax Avoidance: Contingency Perspectives Depended on Country’s Protection Level and Law Systems. Gadjah Mada International Journal of Business, 22(1), 74-98. Retrieved from https://jurnal.ugm.ac.id/v3/gamaijb/article/view/15725