Firm size, profitability, and tax avoidance: Evidence from Indonesia's listed food and beverage companies, 2021–2023

Abstract

This study examines how firm size and profitability relate to tax avoidance among food and beverage companies listed on the Indonesia Stock Exchange (IDX) over 2021–2023. Tax avoidance is measured using the Cash Effective Tax Rate (Cash ETR), firm size is proxied by the natural logarithm of total assets, and profitability is measured using Return on Assets (ROA). Using a quantitative approach with multiple linear regression, data were drawn from 18 companies over three years (54 firm-year observations) selected through purposive sampling and analyzed in SPSS following standard classical-assumption testing. The results show that firm size has a negative and significant effect on tax avoidance (coefficient = -0.187; p = 0.017), while profitability has a positive but non-significant effect (coefficient = 0.286; p = 0.076). Jointly, firm size and profitability significantly affect tax avoidance (F = 3.178; p = 0.050), with an Adjusted R² of 0.106, indicating that the two variables explain 10.6% of the variation in tax avoidance, while the remaining 89.4% is attributable to factors outside the model.