Tax Motivation in Earnings Management

Earnings management is a manager's behavior in managing reported earnings by using methods/techniques to achieve personal and corporate interests. Where earnings management can be viewed based on two perspectives, namely the opportunistic perspective and Messod (2001). According to Watts and Zimmerman (1986), one of the hypotheses of managers in earnings management is related to the political cost hypothesis. One of the methods that can be used by management is tax avoidance in the practice of earnings management. Research evidence shows that first, there is no difference in the pattern of tax avoidance before and during the Covid-19 pandemic, tax avoidance methods are still used as a tool to manage corporate earnings; second, the corporate governance mechanism through majority share ownership by the government is better able to suppress tax avoidance in earnings management; third, to encourage more transparent and ethical business management in companies especially in government-owned companies, voluntary disclosure (CSR) can reduce tax avoidance and reduce earnings management; fourth, the existence of political connections that the company has provides an opportunity for managers to take advantage of information about taxation and use it in earnings management behavior.