Tax Strategy and Earnings Management: The Moderating Effect of Company Size

Firmansyah Firmansyah (Universitas Widya Gama Mahakam Samarinda)
Martinus Robert Hutauruk (Faculty of Economics and Business, Widya Gama Mahakam University)
Windy Aditya Aprilianawati (Faculty of Economics and Business, Widya Gama Mahakam University)
Meutia Layli (Faculty of Economics and Business, Alma Ata University)
Serhii Ostapchuk (National Scientific Centre, Institute of Agrarian Economics)

AKRUAL: Jurnal Akuntansi
Vol 18 No 1 (2026): AKRUAL: Jurnal Akuntansi (In Progress)

Introduction/Main Objectives: This study aims to analyze the effect of deferred tax assets, Deferred tax expenses, tax planning, and leverage on Earnings Management practices, as well as to examine the role of firm size as a moderating variable in property and real estate companies listed on the Indonesia Stock Exchange. Background Problems: Financial performance fluctuations caused by regulatory dynamics and economic instability put pressure on property and  real estate sector issuers to maintain profit stability. The potential exploitation of tax loopholes and high debt levels trigger the manipulation of financial statements, coupled with inconsistencies in previous findings regarding the impact of leverage and taxes on earnings management. Novelty: The novelty of this research lies in the use of firm size as a moderating variable to mitigate or strengthen the impact of tax accounts and leverage on earnings management, specifically within the property sector during periods of crisis and economic recovery. Research Methods: Using purposeful sampling, the researchers obtained 175 observations from 35 real estate and property issuers listed on the Indonesia Stock Exchange between 2020-2024. Data analysis was conducted through multiple linear regression and moderated regression analysis. Finding/Results: The simultaneous test results indicate that all independent variables collectively exert a significant influence on earnings management. Partially, deferred tax assets and deferred tax expenses are proven to have a positive and significant effect on earnings management, whereas tax planning and leverage show no significant impact. The moderation test confirms that firm size significantly weakens the influence of deferred tax assets and deferred tax expenses on earnings management, but it fails to moderate the impact of tax planning and leverage. Conclusion: Deferred tax assets and deferred tax expenses act as the primary drivers of earnings management practices in property companies. Conversely, firm size is empirically proven to serve as a negative moderator, indicating that a larger corporate scale can suppress tax accounting-based profit manipulation practices due to a higher degree of public scrutiny.