International Conference on Vocational Business, Logistic, Accounting, Supply Chain, Tax (ICoBLAST)

Introduction/Main Objectives: This study aims to examine the effect of accounting conservatism and tax avoidance on firm value in the energy sector of the Indonesia Stock Exchange (IDX). It evaluates whether these financial management practices contribute to or detract from firm value, using the framework of Agency Theory to explain managerial behavior and investor responses.

Background Problems: Previous studies provide mixed evidence on how conservatism and tax avoidance affect firm value. While both are intended to improve efficiency and reduce information asymmetry, excessive conservatism can distort earnings, and aggressive tax avoidance can increase reputational and regulatory risks. These contradictions, combined with limited research in Indonesia’s energy sector, create uncertainty about their true value implications. This study contributes to the literature by focusing specifically on Indonesian energy firms during the post-pandemic period (2021–2023), incorporating recent financial reforms and the use of cash effective tax rate (CETR) as a realistic measure of tax avoidance.

Novelty: This study contributes to the literature by focusing specifically on Indonesian energy firms during the post-pandemic period (2021–2023), incorporating recent financial reforms and the use of cash effective tax rate (CETR) as a realistic measure of tax avoidance.

Research Methods: A quantitative causal-explanatory approach was employed using panel data of energy firms obtained from the Bloomberg database. The data were analyzed using fixed-effects regression in STATA to control for firm-specific heterogeneity.

Findings/Results: The results indicate that both accounting conservatism and tax avoidance have negative but statistically insignificant effects on firm value. The model’s explanatory power is low, suggesting that firm value is driven by other firm-specific factors.

Conclusion: These findings imply that conservatism and tax avoidance may not enhance firm value and can even reduce investor confidence when perceived as excessive or opportunistic.

Implementation Potential: The results encourage regulators (OJK and DJP) to balance transparency and flexibility in reporting standards, guide managers toward ethical accounting and tax practices, and help investors interpret conservatism and tax strategies more critically in valuation decisions.

Keywords: Accounting Conservatism; Tax Avoidance; Firm Value; Cash Effective Tax Rate; Agency Theory; Energy Sector

JEL Classification: (list the relevant JEL codes separated by commas, refer to https://www.aeaweb.org/jel/guide/jel.php)

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