Pengaruh Cash Holding, Financial Constraints, dan Ceo Overconfidence Terhadap Tax Avoidance pada Perusahaan Perbankan yang Terdaftar di Bursa Efek Indonesia Tahun 2021–2025

Abstract

This study examines the effect of cash holding, financial constraints, and CEO overconfidence on tax avoidance among banking companies listed on the Indonesia Stock Exchange (IDX) during 2021–2025, addressing the mixed findings of prior studies. Using an associative quantitative approach, the study analyzes secondary panel data from 22 commercial banks selected through purposive sampling, yielding 110 firm-year observations. Tax avoidance is proxied by the Cash Effective Tax Rate (CETR), cash holding by the ratio of cash and cash equivalents to total assets, financial constraints by the SA Index, and CEO overconfidence by a dummy variable based on the capital expenditure ratio. The Chow and Hausman tests indicate the Fixed Effect Model (FEM) as the appropriate estimator. Regression results show that cash holding has a significant negative effect on CETR (β = -0.4196; p = 0.0000), since CETR moves inversely with tax aggressiveness, banks holding larger cash reserves tend to engage in more aggressive tax avoidance. Financial constraints show no significant effect on CETR (β = -0.1942; p = 0.1116), plausibly because strict OJK capital regulations limit the room for financially constrained banks to pursue risky tax strategies. CEO overconfidence could not be tested because its dummy variable showed no variation across the sample. The study also identifies substantial multicollinearity between financial constraints and firm size, which is expected given that the SA Index is itself constructed from size and age components; the control variable's coefficient should therefore be interpreted with caution. These findings offer input for regulators in mapping tax-compliance risk among highly liquid banks.