The Influence of Audit Committee, Audit Quality, and Audit Fees on Tax Avoidance with Firm Size as a Moderating Variable

Abstract

Purpose: This study aims to evaluate and examine the empirical effects of the audit committee, audit quality, and audit fee on tax avoidance, alongside investigating whether firm size acts as a significant moderating variable within these relationships.  

Design/methodology/approach: Using a quantitative approach based on agency theory, this study examines secondary data extracted from the annual reports and audited financial statements of mining and energy companies listed on the Indonesia Stock Exchange (IDX) during the 2021–2025 period. The sample was selected via purposive sampling, and the structural relationships were scrutinized through Moderated Regression Analysis (MRA) processed using EViews.

Findings: The empirical analysis reveals that the direct baseline effects of the audit committee (b=-0.004979,p=0.8620), audit quality (b=-0.039029,p=0.7337), and audit fee (b=-2.45×10^(-9),p=0.8896) on tax avoidance are statistically negative and non-significant. Furthermore, MRA assessments indicate that firm size fails to moderate any of the structural paths, as all interaction terms yield non-significant results (p>0.05) amid a very weak model explanatory power (R^2=3.70%).

Practical implications: These findings suggest that existing internal and external auditing mechanisms in the mining and energy sectors do not inherently restrain or drive corporate tax planning.

Originality/value: This empirical paper extends the current literature by introducing firm size as a conditional moderator to reconcile conflicting conclusions from prior corporate governance and tax compliance studies in an aggregate framework.

Paper type: Empirical.