Binus Business Review, 9(1), March 2018, 63-69 P-ISSN: 2087-1228

DOI: 10.21512/bbr.v9i1.3672 E-ISSN: 2476-9053

The Effect of Corporate Social Responsibility,

Profitability, and Leverage toward Tax Aggressiveness
with Size of Company as Moderating Variable
Riza Aulia Fitri1; Agus Munandar2

Accounting Department, Faculty of Business, Institut Teknologi dan Bisnis Kalbis

1,2

Jln. Pulo Mas Selatan Kav. 22, Jakarta Timur 13210, Indonesia
1
[email protected]; [email protected]

Received: 12th June 2017/ Revised: 4th October 2017/ Accepted: 30th October 2017

How to Cite: Fitri, R. A., & Munandar, A. (2018). The Effect of Corporate Social Responsibility, Profitability,
and Leverage toward Tax Aggressiveness with Size of Company as Moderating Variable.
Binus Business Review, 9(1), 63-69. https://doi.org/10.21512/bbr.v9i1.3672

ABSTRACT

This research aimed to examine the influence of Corporate Social Responsibility (CSR), profitability, and leverage
toward tax aggressiveness by considering the size of the company as the moderating variable. The population was
111 companies listed on the Indonesian Stock Exchange (BEI) from 2010 to 2015. Determination of the sample
used purposive sampling method, and it obtained a sample of 36 manufacturing based on certain criteria. The
analysis technique used was the multiple regression analysis. The results show that CSR and leverage have a
significant and negative effect influence on the tax aggressiveness of the corporate tax. Meanwhile, profitability
does not significantly influence the tax aggressiveness in corporate taxes, and the size of company cannot moderate
the influence of CSR, the profitability, and leverage on tax aggressiveness.

Keywords: Corporate Social Responsibility, profitability, leverage, tax aggressiveness, size of company

INTRODUCTION the tax. The efforts or strategies undertaken are by

tax planning or tax aggressiveness. Most companies
One of the obligations of citizens to their perform tax aggressiveness to minimize tax expense
country is to pay taxes. According to Waluyo (2011), which is useful for managers in decision making.
it is one way to realize the independence of the nation Hlaing in Kuriah (2016) defined tax aggressiveness
in fostering development. Taxes are one of the main as a tax planning activities. Tax planning was a
and greatest sources of income for the state. Therefore, process of controlling action to avoid the undesired
the government is concerned about this. consequences of taxation. To minimize the tax
Based on data in the Badan Pusat Statistik liability, it could be done in various ways that still met
(2009) in the period 2010-2015, there was an increase the provisions of taxation and violated tax regulations
from Rp723.207 billion in 2010 to Rp1.240.418 billion (Suandy, 2016). Richardson and Lanis (2011) agreed
in 2015 or an increase of 71,50% over the period of that tax aggressiveness was aimed to minimize
2010-2015. Income has indeed increased over the last tax costs that had to be paid by the company. They
six years, but the revenue target has not reached the said that companies performing tax aggressiveness
set target. In fact, the revenue in last six years does was considered as socially irresponsible. The tax
not reach the target. In 2015, it had the lowest income. aggressiveness had formula as follow.
The company is one of the taxpayers who have
the obligation to pay taxes. However, for the company,
tax is a burden that can reduce the gained profit.
Therefore, the company will seek way to minimize (1)

Copyright©2018 63
 Corporate Social Responsibility (CSR) is Moreover, characteristics of companies are a
undertaken activity to show company’s responsibility characteristic or trait attached to a business entity. It
to the environment. The underlying theory of CSR is can be viewed from various aspects including type of
legitimacy theory and stakeholders theory. Legitimacy business or industry, level of liquidity, profitability,
theory is company strategy to increase public trust. firm size, investment decisions and others (Kuriah,
It is based on the phenomenon of social 2016). Size of company is a measurement based on the
contact between an organization and society. The size of a company and can be described as the activity
organization’s objectives should be congruent with the and income of a company. The larger the company is,
values that exist within a society (Sagala & Ratmono, the greater the effort made by the company to attract
2015). This theory explains the social contact between public attention will be. Therefore, disclosure about the
company, social community, and environmental size of company is added as moderating variables. It is
disclosure. Meanwhile, stakeholder theory is a theory considered to affect the relationship CSR, profitability,
that describes the relationship between companies and leverage, and tax aggressiveness. The size of
with its stakeholders in carrying out its activities. company has formula by Kuriah and Asyik (2016).
Stakeholder refers to the group or individual who can
affect or be affected by the achievement of company SIZE = (Ln)from Total Asset (5)
goals. The purposes of these theories are to assist
and strengthen relationships with external groups to Based on background discussed, this research
develop competitive advantage (Mardikanto, 2014). will answer some questions. Those are (1) Does the
The social disclosure category used in this research CSR influence the tax aggressiveness? (2) Does the
refers to the disclosure indicator, Global Report size of the company can moderate the relationship
Initiative (GRI). In GRI report, there are several between CSR and the tax aggressiveness? (3) Does the
impacts. Those are economic impact, environmental profitability influence the tax aggressiveness? (4) Does
impact, and social impact (Solihin, 2011). The CSR the size of the company can moderate the relationship
has formula as follows by Prasista and Setiawan between profitability and tax aggressiveness? (5) Does
(2016). the leverage influence the tax aggressiveness? (6) Does
the size of the company can moderate the relationship
between leverage and tax aggressiveness?
Pradnyadari and Rohman (2015), Kuriah (2016),
(2) and Purwanggono and Rohman (2015) analyzed
the influence of CSR on tax aggressiveness. The
Then, financial ratios related to tax aggressiveness result showed that CSR significantly influenced tax
are profitability and leverage. Profitability is a financial aggressiveness negatively. This shows that the higher
ratio that measures the overall effectiveness of level of CSR disclosure of a company is, the lower
management. It is directed by the size of the gained the level of corporate tax aggressiveness will be.
profits in relation to sales or investment. The better the Therefore, the first hypothesis is:
profitability ratio is, the better the ability to capture
the high profits of the company will be (Fahmi, 2014). H1 : CSR negatively affects tax aggressiveness
Profitability is obtained from profit amount gained
by company. Large profit will effect company assets. Kuriah (2016) stated that CSR influenced
The amount of earned revenue will be used to cover tax aggressiveness significantly and negatively.
the debt so that the gained profits will be lower. The Meanwhile, Size of company had positive effect on tax
profitability has formula as follows (Kasmir, 2015). aggressiveness. This implies that the bigger a company
is, the better CSR is expected in the environment.
Therefore, the researchers assume that size of company
(3) can moderate the relationship between CSR and tax
aggressiveness. Thus, the second hypothesis is:

Leverage is a ratio that measures how much H2 : Size of company moderates the relationship
a company is financed by debt. The excessive use between CSR and tax aggressiveness
of debt will jeopardize the company because the
company will be categorized as extreme leverage (the Prasista and Setiawan (2016) analyzed the
extreme debt). It means that the company is stuck in a effect of profitability on tax aggressiveness. It
high debt level. It is difficult to pay the debt because resulted in profitability had negative influence on tax
the company should balance how much debt is worth aggressiveness. Companies with low profitability will
taking and from where it can be used to pay the debt have a high probability of disobeying taxes. This is
(Fahmi, 2014). The leverage has formula by Kasmir because companies with low profitability will choose
(2015). to keep their financial and corporate assets rather than
paying taxes, so the company becomes aggressive
(4) with taxes. Then, the third hypothesis of this research
is:

64 Binus Business Review, Vol. 9 No. 1, March 2018, 63-69

H3 : Profitability affects on the tax aggressiveness arising from these debts. Thus, the fifth hypothesis is:
positively
H5 : Leverage affects tax aggressiveness negatively
Prasista and Setiawan (2016) examined the
effect of profitability on aggressiveness. They showed Ozkan in Suyanto and Supramono (2012) said
that profitability had negative influence toward tax that companies having high tax liabilities would
aggressiveness. Meanwhile, Kuriah (2016) analyzed choose to reduce taxes. Then, Kuriah (2016) agreed
the effect of size of company on tax aggressiveness. that size of company had a positive relationship
The size of company had a significant influence on with tax aggressiveness. The association of size of
tax aggressiveness positively. Profitability is the company with leverage and tax aggressiveness is that
company’s ability to earn profits from the company’s a company has a debt depending on the size of the
operations. A high level of corporate profitability company. Hence, it can encourage the company to
will encourage companies to pay taxes and not engage in tax aggressiveness. The researchers assume
to do tax aggressiveness. In addition, the size of that size of company can strengthen or weaken a
company has a relationship between profitability and relationship between leverage and tax aggressiveness.
tax aggressiveness. A company likely to have high The last hypothesis is:
profitability will have a low probability of disobeying
taxes. The fourth proposed hypothesis is: H6 : Size of company moderates the relationship
between leverage and tax aggressiveness
H4 : Size of company moderates the relationship
between CSR and tax aggressiveness The researchers use three independent variables
which are CSR (X1), profitability (X2), and leverage
Nugraha and Meiranto (2015) analyzed the effect (X3). Then, the moderating variable is size of
of leverage on tax aggressiveness. They suggested that company. Meanwhile, the dependent variable is tax
leverage affected tax aggressiveness negatively. This aggressiveness (Y). Moderating variables used can
shows that the higher the level of leverage is, the lower weaken or strengthen the relationship between the
corporate tax aggressiveness is too. Companies tend to dependent and independent variables. It is shown in
use debt for investments leading to higher interest costs Figure 1.

Figure 1 Conceptual Framework

The Effect of Corporate Social Responsibility, ..... (Riza Aulia Fitri; Agus Munandar) 65
METHODS X1 : CSR
X2 : Profitablity
This research uses quantitative method. The data X3 : Leverage
are in the form of numbers or qualitative data that can Z : Size of Companies
be measured using statistical methods. The population е : error
in this research is all manufacturing companies listed
in the Indonesia Stock Exchange (BEI) in 2010 to RESULTS AND DISCUSSIONS
2015. The selection of period of six years aims to
compare the state of the company for six years and
get the latest data that can explain the problem in
this research. Manufacturing companies are selected
because it refers to previous research and is expected
to represent the entire companies in Indonesia.
The dependent variable used is tax
aggressiveness. Meanwhile, the independent variables
used are CSR, profitability, and leverage with a
moderator variable, size of company. Aggressiveness
is measured by Effective Tax Rate (ETR). ETR is a
proxy that is widely used in previous researches.
ETR illustrates total income and tax expense that
will be paid by the company. It is taken from total of
net profit before tax in a certain period. Moreover,
CSR is measured by the index of GRI 3.1 using 84
measurement items. Profitability is measured by
ROA with profit before taxes are divided by total
assets. Leverage is measured by total of long-term
debt divided by total assets. Next, size of company is
Figure 2 Histogram Graph Normality Test Result
measured by the natural log of total assets.
The sample is partially or representative of the
studied population. The samples are companies listed
in BEI in 2010 to 2015 that meet the criteria. Samples
are selected by purposive sampling method. It selects
a sample based on specific criteria in accordance with
the purpose of research. There are several criteria
used in this research. First, it is the manufacturing
companies listed on Indonesia Stock Exchange from
2010 to 2015. Second, the manufacturing companies
publish complete annual reports and audited financial
statements as of December 31st, 2010 to December
31st, 2015. Third, the manufacturing companies
publish financial statements using Indonesian Rupiah
(RP) as the currency. Fourth, the manufacturing
companies have no loss during 2010 to 2015. Fifth,
the manufacturing companies disclose CSR report in
their financial statements during the years studied.
Moderated Regression Analysis (MRS) is used
to analyze the correlation between the variables. MRA
uses an analytical approach that maintains sample
and provides the basis to control the influence of
moderator variables (Ghozali, 2016). The MRA uses Figure 3 P-Plot Normality Test Result
the following equation.
Normality test is a basic requirement that must
be fulfilled within parametric analysis. It aims to test
(6) whether the model of regression or residual variable
has a normal distribution. By looking at the normal
graph histogram and P-Plot in Figure 2 and Figure
Description: 3, it can be said that the histogram graph shows the
Y : Tax aggressiveness normal distribution pattern. On the normal plot charts,
α : Constants the visible dots are spread around the diagonal line and
β1 - β7 : Regression Coefficients follow the direction.

66 Binus Business Review, Vol. 9 No. 1, March 2018, 63-69

 Multicollinearity test is performed to determine Moreover, heteroscedasticity test determines
whether the regression model finds a correlation the presence or absence of deviation of the classical
between the independent variables. Multicollinearity assumption in heteroscedasticity. It is the variant of
can be seen from tolerance value and Variance Inflation inequality of the residual for all observations on the
Factor (VIF). If tolerance value is > 0,1 and VIF is model regression. The prerequisite that must be fulfilled
< 10, the multicollinearity does not occur in regression in the regression model is the absence of symptoms of
model. Multicollinearity test results are presented in heteroscedasticity (Priyatno, 2008).Heteroscedasticity
Table 2. test used in this research is Scatterplot chart. In this
research, it uses a graphical method (see the pattern
of dots in the regression graph). A good regression
Table 2 Multicollinearity Test
model is a regression model that does not contain
heteroscedasticity. The results of the test using the
Collinearity Statistics
Model chart can be seen in Figure 4.
tolerance VIF
(Constant)
CSR 0,825 1,213
DER 0,792 1,262
ROA 0,754 1,326
SIZE 0,797 1,254

Table 2 shows that the value of the variable

tolerance is 0,10 and VIF is ≤ 10. It can be stated
that there is no multicollinearity among independent
variables in the regression model. Hence, the
regression model is fit to be used in this research.
Autocorrelation test is to determine the presence
or absence deviation of the classical autocorrelation
assumption. The correlation occurs between residual
and observation with other observations on the
Figure 4 Heteroscedasticity Test Result
regression model. The prerequisite to be fulfilled is
the absence of autocorrelation in regression model.
This test can be calculated using the run test. If there
is no correlation between residual, the residual is
Table 4 Significance Test Parsial (T-test) Result
random. The run test is used to see if residual data
occurs randomly or not. Autocorrelation test results Coefficientsa
are presented in Table 3.
Unstandardized Standardized
Coefficients Coefficients
Std.
Table 3 Autocorrelation Test Results Model B Error Beta t Sig.
1 (Constant) 0,308 0,010
Residual unstandardized
CSR -0,256 0,069 -0,275 -3,691 0,000
Test Value 0, 01257
ROA -0,074 0,040 -0,152 -1,847 0,067
Cases <Test Value 80
DER -0,034 0,008 -0,343 -4,267 0,000
Cases> = Test Value 80
a. Dependent Variable: ETR
total Cases 160
Number of Runs 75
Z 0, 952 Figure 4 shows that the dots are randomly
Asymp. Sig. (2-tailed) 0, 341 spread above and below the number 0 on the Y axis. It
can be suggested that there is no heteroscedasticity in
regression models so that the decent regression model
can be used.
This research uses run test for the presence Based on Table 4, the value of CSR is -0,256
of autocorrelation in a regression model. Table 3 and the significance value of 0,000 is smaller than the
shows the results of testing that it is -0,01257 with predetermined significance level of 0,05 (0,000 <0,05).
probability of 0,341 > 0,05. It means that the value of This implies that H1 is accepted. CSR has a significant
residual is random or there is autocorrelation between and negative effect on the tax aggressiveness. This
the residual values. shows that the higher level of CSR disclosure in

The Effect of Corporate Social Responsibility, ..... (Riza Aulia Fitri; Agus Munandar) 67
a company is, the lower the level of corporate tax (Z) is -0,009. It implies that every increase of size of
aggressiveness will be. company will affect the decrease of tax aggressiveness
In Table 4, the obtained profitability value about -0,009. Sixth, the value of moderate coefficient
is -0,074 and significance value is 0,067. Those are between CSR with size of company (β5) is 0,078. It
greater than the predetermined significance level of means if the CSR with the size of company increases
0,05 (0,067> 0,05). Then, H2 is rejected. It can be by one, then the tax aggressiveness of the will increase
concluded that the profitability variable does not affect about 0,078. Seventh, the value of moderate coefficient
tax aggressiveness. This shows that profitability in a between profitability with size of company (β6) is
company will not affect the level of tax aggressiveness. 0,005. It shows that the profitability interaction with
Moreover, it shows the leverage value of -0,034 the size of company increases, tax aggressiveness will
and the significance value of 0,000 in Table 4. It is also increase by 0,005. Eighth, the moderate coefficient
smaller than the specified significance level that is value between leverage with size of company (β7) is
0,05 (0,000 <0,05). Thus, it can be concluded that 0,004. It means that leverage with size of company
leverage has negative effect with on tax aggressiveness has increased by one, then the tax aggressiveness will
(H3). This indicates that the higher the leverage of a increase by 0,004.
company is, the lower the tax aggressiveness of the Based on Table 5, the results have shown that
company will be. The moderate regression test results the value of coefficient value for CSR with size of
are presented in Table 5. company as the moderator is 0,078 and the significance
value is 0,072. This suggests that significant value is
above 0,005. It can be concluded that size of company
Table 5 Moderate Regression Test Result is not a variable that can moderate the relationship
between CSR and tax aggressiveness. Based on these
Coefficients test results, H4 is rejected.
unstandardized Table 5 presents the results that the value of
Model B Std. Error t Sig. profitability and the size of company has the coefficient
value of 0,015 and significance value of 0,464. This
1 (Constant) 0,575 0,189 3,038 0,003
is above 0,005, so the H5 is rejected. Then, it can be
CSR -2,464 1,209 -2,038 0,043 concluded that size of company is not a variable that
ROA -0,216 0,666 -0,324 0,746 can moderate the relationship between profitability
DER -0,145 0,150 -0,964 0,337 and tax aggressiveness.
SIZE -0,009 0,007 -1,379 0,170 Table 5 shows the value of coefficient for
CSR*SIZE 0,078 0,043 1,811 0,072
leverage with size of company as moderator is 0,004
and significance value of 0,464. This suggests that
ROA*SIZE 0,015 0,024 0,201 0,841
significant value is above 0,005. It can be concluded
DER*SIZE 0,004 0,005 0,734 0,464 that size of company is not a variable that moderates
a. Dependent Variable: ETR the relationship between leverage with the tax
aggressiveness. It can be concluded that size of
company cannot moderate the relationship between
leverage and tax aggressiveness. Based on these test
results, H6 is rejected in this research.
(7)
CONCLUSIONS

Based on Table 5, the regression equation There are several conclusions drawn from the
can be obtained. It is shown in equation (7). From results. First, CSR has a negative and significant impact
the regression equation, the implications can be on the tax aggressiveness. The companies conducting
explained. First, the constant value of 0,575 indicates CSR activities will be responsible for paying tax. It
that CSR, profitability, leverage, and size of company means company will avoid tax aggressiveness because
have constant value of 0,000, and tax aggressiveness the company tries to build good relationship with the
is 0,575. Second, the value of regression coefficient of stakeholders. When the company cares about the
CSR (β1) is -2,464. This shows that in every increase environment, it tends to be responsible to fulfill its
of CSR, there will be a decrease in tax aggressiveness obligations in paying taxes to keep the reputation of the
about -2,464. Third, the value of regression coefficient company. Second, size of company does not moderate
of profitability (β2) is -0,216. This shows that each the correlation between CSR and tax aggressiveness.
increase in profitability, then there will be a decrease Third, profitability has a negative and insignificant
in aggressiveness about 0,216. Fourth, the value of impact on the tax aggressiveness. The number of
regression coefficient of leverage (β3) is -0,145. It a company’s profits cannot affect the company in
means that in every increase of leverage, there will be conducting tax aggressiveness. Companies that have
a decrease in tax aggressiveness about -0,145. Fifth, large or small profits have the same opportunity in
the value of regression coefficient of size of company conducting tax aggressiveness. Fourth, size of company

68 Binus Business Review, Vol. 9 No. 1, March 2018, 63-69

does not moderate the correlation between profitability Purwanggono, E., & Rohman, A. (2015). Analisis pengaruh
and tax aggressiveness. Fifth, leverage has a negative Corporate Social Responsibility dan kepemilikan
and insignificant impact on the tax aggressiveness. mayoritas terhadap agresivitas pajak. Diponegoro
The result of leverage that has a negative direction Journal of Acconting, 4(2), 1-13.
indicates that the company utilizes the debt to invest Richardson, G. A., & Lanis, R. (2011). Corporate social
in the company’s use. The higher the interest expense responsibility and tax aggressiveness. Accounting,
arising from the debt is. The higher interest rates will Auditing & Accountability Journal, 26(1), 75-100.
affect the company’s tax expense. It can be said that Sagala, W. M., & Ratmono, D. (2015). Pengungkapan
the company uses debt to minimize the tax expense Corporate Social Responsibility (CSR) sebagai
by the company by utilizing tax aggressiveness. Sixth, sarana legitimasi: Dampaknya terhadap tingkat
size of company does not moderate the correlation agresivitas pajak. Nominal: Barometer Riset
between leverage and tax aggressiveness. Akuntansi dan Manajemen, 4(2), 16-30.
This research still has some limitations. One Solihin, I. (2011). Corporate Social Responsibility from
of them is an element of subjectivity in determining charity to sustainability. Jakarta: Salemba Empat.
the CSR disclosure indices and the lack of references Suandy, E. (2016). Perencanaan pajak edisi 6. Jakarta:
on correlation between CSR, profitability, leverage, Salemba Empat.
and tax aggressiveness with size of company as the Suyanto, K. D., & Supramono. (2012). Likuiditas, leverage,
moderating variable. komisaris independen, dan manajemen laba terhadap
Based on the results obtained, the researchers agresivitas pajak perusahaan. Jurnal Keuangan dan
suggest future research. It can use the other moderating Perbankan, 16(2), 167-177.
variables that may have a correlation between CSR, Waluyo. (2011). Perpajakan Indonesia. Jakarta: Salemba
profitability, leverage, and tax aggressiveness. Empat.

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