This study aims to examine the effect of innovation on tax avoidance and firm value, as well as the effect of tax avoidance on firm value. Using a total sample of 133 manufacturing companies listed in the Indonesia Stock Exchange (IDX) during 2007-2017 with 1025 observations, this study proves that companies which have many patents do not carry out tax avoidance. This finding is drawn from the small difference in accounting and fiscal profits of the innovation company. It also shows that companies that innovate do not shift their profits through tax avoidance to keep innovating. Furthermore, this study found that the higher the innovation, the higher the value of the company. This result supports the signal theory which states that innovation is a positive signal for a company because it reflects the company's competitiveness, which will increase its firm value.
|Number of pages||16|
|Journal||International Journal of Innovation, Creativity and Change|
|Publication status||Published - 2019|
- Firm value
- R and D expenses
- Tax avoidance