The effect of XBRL adoption on corporate tax avoidance: empirical evidence from an emerging country
Journal of Financial Reporting and Accounting
ISSN: 1985-2517
Article publication date: 17 March 2022
Abstract
Purpose
This paper aims to study the impact of the adoption of eXtensible Business Reporting Language (XBRL) on corporate tax avoidance.
Design/methodology/approach
This paper used a quantitative method with panel data regression models using a sample of firms listed on the Indonesia Stock Exchange from 2011 to 2018.
Findings
The regression results demonstrate that XBRL implementation does not have any impact on corporate tax avoidance. The results indicate that tax avoidance is not reduced following XBRL adoption. This report shows unexpected and unfavourable outcomes of XBRL financial reporting in a developing country.
Research limitations/implications
This study employs a sample of firms from one emerging country only.
Practical implications
The study proposes several implications for using XBRL in tax reporting, which may help the tax authorities reduce tax avoidance. Regulators need to develop adequate taxonomies with standardized extensions related to tax information in the XBRL format. They include tax tags from financial statements and tax tags from the disclosure section, to gain more comprehensive corporate tax information.
Originality/value
This study proposes and tests an explanation for the effect of XBRL adoption on corporate tax avoidance in the context of a developing country.
Keywords
Acknowledgements
The authors would like to thank the editor, the associate editor and the anonymous reviewers for their helpful and valuable comments and recommendations. The authors would like to thank the Department of Accounting, Faculty of Economics and Business, Universitas Gadjah Mada and the Department of Fiscal Administration, Faculty of Administrative Sciences, Universitas Indonesia for supporting this study.
Citation
Saragih, A.H. and Ali, S. (2022), "The effect of XBRL adoption on corporate tax avoidance: empirical evidence from an emerging country", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-09-2021-0281
Publisher
:Emerald Publishing Limited
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