Board Characteristics, CEO Narcissism, and CEO Overconfidence on Tax Avoidance
DOI:
https://doi.org/10.30741/assets.v10i2.1972Keywords:
Board Characteristics, CEO Narcissism, CEO Overconfidence, Tax AvoidanceAbstract
The primary objective of this research is to assess the degree to which governance characteristics encompassing board independence, gender diversity, and board size and the psychological dispositions of top executives, specifically CEO narcissism and overconfidence, exert influence over corporate tax avoidance conduct. A quantitative explanatory methodology is employed, utilizing panel data regression analysis under the Random Effects Model (REM) estimation framework. The research population consists of all non-financial enterprises listed on the Indonesia Stock Exchange (IDX) throughout the 2022–2024 observation period, with purposive sampling procedures generating a refined sample of 248 firms and a cumulative dataset of 744 observations. Empirical results indicate that board size carries a significant negative bearing on tax avoidance, suggesting that organizations with larger boards possess greater capacity to deter managerial tax avoidance behavior. In opposition, CEO overconfidence demonstrates a significant positive association, corroborating the premise that overconfident chief executives are predisposed to adopt increasingly aggressive tax planning approaches. Notably, board independence, gender diversity among commissioners, and CEO narcissism each failed to register statistically significant effects on tax avoidance. Collectively, these findings highlight the critical importance of fortifying formal supervisory mechanisms within organizational governance structures as a means of mitigating the adverse influence of executives' psychological characteristics on strategic financial decision-making.
Downloads
References
Achmad, T., Helmina, M. R. A., Hapsari, D. I., & Pamungkas, I. D. (2023). Does Independent Commissioner Affect Tax Avoidance? Evidence from Mining Companies in Indonesia. Wseas Transactions on Business and Economics, 20, 1908–1915. https://doi.org/10.37394/23207.2023.20.166
Ali, R., Ahmed, M., Amin, A., & Rehman, R. ur. (2024). Board Attributes and Tax Avoidance: The Moderating Role of Institutional Ownership. Managerial and Decision Economics, 45(8), 5649–5667. https://doi.org/10.1002/mde.4338
Araújo, V. C., Góis, A. D., Luca, M. M. M. De, & Lima, G. A. S. F. de. (2020). CEO Narcissism and Corporate Tax Avoidance. In Revista Contabilidade & Finanças. SciELO Brasil. https://doi.org/10.1590/1808-057x202009800
Azmi, S. N. S., Hamid, N. A., Ismail, I. S., & Palil, M. R. (2024). The Influence of Board Attributes towards Tax Avoidance: Evidence from Malaysian Public Listed Companies. Accounting and Finance Research, 13(2), 154. https://doi.org/10.5430/afr.v13n2p154
Bauer, T., Kourouxous, T., & Krenn, P. (2018). Taxation and agency conflicts between firm owners and managers: a review. Business Research, 11(1), 33–76. https://doi.org/10.1007/s40685-017-0054-y
Chen, C. Y., Nor-Ahmad, S. N. H. J. N., & Ali, R. H. binti R. Mohd. (2025). The Effect of CG on Tax Avoidance: The Moderating Role of Company Size. Multidisciplinary Science Journal, 7(8), 14. https://doi.org/10.31893/multiscience.2025415
Chen, Y. (2023). The Agency Problem: Examining the Dilemma Between Shareholder and CEO Bonus Structures. Advances in Economics, Management and Political Sciences, 30(1), 255–261. https://doi.org/10.54254/2754-1169/30/20231484
Dayuningtyas, D. F., & Rahmiati, A. (2020). CEO Over-Confidence and Tax Avoidance. International Journal of Innovation, Creativity and Change, 13(4), 680–696.
Denysenko, N. (2024). Fiscal And Regulatory Effects of Modern Financial Policy. Spatial Development, (10), 544–553. https://doi.org/10.32347/2786-7269.2024.10.544-553
García-Meca, E., Ramón-Llorens, M.-C., & Martínez-Ferrero, J. (2021). Are Narcissistic CEOs More Tax Aggressive? The Moderating Role of Internal Audit Committees. Journal of Business Research, 129, 223–235. https://www.sciencedirect.com/science/article/pii/S0148296321001338
Ghozali, I. M. C. (2020). 25 Grand Theory: Teori Besar Ilmu Manajemen, Akuntansi dan Bisnis untuk Landasan Teori Skripsi, Tesis dan Disertasi. Yoga Pratama.
Handoko, R. (2019). Tax Revenue and Economic Activity: Seasonality, Cointegration and Causality Analysis. Kajian Ekonomi Dan Keuangan, 3(1), 1–17. https://doi.org/10.31685/kek.v3i1.401
Hasan, A., Anwar, W., Zahir-Ul-Hassan, M. K., & Ahmed, A. (2024). Corporate Governance and Tax Avoidance: Evidence from an Emerging Market. Applied Economics, 56(22), 2688–2704. https://doi.org/10.1080/00036846.2023.2198195
Hsieh, T.-S., Wang, Z., & Demirkan, S. (2018). Overconfidence and Tax Avoidance: The Role of CEO and CFO Interaction. Journal of Accounting and Public Policy, 37(3), 241–253. https://doi.org/10.1016/j.jaccpubpol.2018.04.004
Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Kalbuana, N., Taqi, M., Uzliawati, L., & Ramdhani, D. (2023). CEO Narcissism, Corporate Governance, Financial Distress and Company Size on Corporate Tax Avoidance. Cogent Business & Management, 10(1). https://doi.org/10.1080/23311975.2023.2167550
Karavitis, P., Kazakis, P., & Xu, T. (2025). Overconfident CEOs, Corporate Social Responsibility, and Tax Avoidance: Evidence from China. Journal of International Accounting, Auditing and Taxation, 59(5), 100702. https://doi.org/10.1016/j.intaccaudtax.2025.100702
Karina, M., Prawati, L. D., Utami, N. P., & Gunawan, T. A. (2024). Exploring the Impact of Ceo Traits on Tax Avoidance: Narcissism, Compensation and Risk-Taking. International Journal of Contemporary Accounting, 6(1), 61–78. https://doi.org/10.25105/gfqqta55
Lanis, R., Richardson, G., & Taylor, G. (2017). Board of Director Gender and Corporate Tax Aggressiveness: An Empirical Analysis. Journal of Business Ethics, 144(3), 577–596. https://doi.org/10.1007/s10551-015-2815-x
Mira, M., Masrullah, M., & Mursalim, N. A. (2025). Audit Fee Stickiness, CEO Narcissism, and Tax Avoidance in IDX-Listed Manufacturing Firms (2020–2022). Invoice: Jurnal Ilmu Akuntansi, 7(1), 121–136. https://doi.org/10.26618/inv.v7i1.17670
Osei Bonsu, C., Liu, C., & Yawson, A. (2024). The Impact of CEO Attributes on Corporate Decision-Making and Outcomes: A Review and an Agenda for Future Research. International Journal of Managerial Finance, 20(2), 503–545. https://doi.org/10.1108/IJMF-02-2023-0092
Pandapotan, F., Oktavianthie, N., & Setiany, E. (2024). Board Characteristics, Audit Quality and CEO Narcissism on Tax Avoidance: Evidence from Consumer Staples in Indonesia and Australia. Review of Integrative Business and Economics Research, 13(3), 322–335.
Rahayu, I., & Wahyudi, I. (2025). Pengaruh Karakteristik Dewan, Kualitas Audit, dan Narsisme Direktur Utama terhadap Penghindaran Pajak. Owner: Riset Dan Jurnal Akuntansi, 9, 1893–1910. https://doi.org/10.33395/owner.v9i2.2769
Sagita, D., Syalwa, M., Fuadah, L., & Mukhtaruddin. (2024). Chief Executive Officer and Tax Avoidance: A Systematic Literature Review. Journal of Economics, Finance and Management Studies, 07(12). https://doi.org/10.47191/jefms/v7-i12-29
Salehi, M., Jabbari, S., Hosseiny, Z. N., & Khargh, F. E. (2024). Impact of Corporate Governance on Tax Avoidance. Journal of Public Affairs, 24(3). https://doi.org/10.1002/pa.2929
Sari, F. A. M., Sasongko, N., & Triyono, T. (2024). CEO Narcissism and Corporate Tax Avoidance: Testing the Moderating Role of ESG. Riset Akuntansi Dan Keuangan Indonesia, 9(2), 179–189. https://doi.org/10.23917/reaksi.v9i2.8610
Sarwono, O., & Fadjarenie, A. (2025). Tax Avoidance in Indonesian Infrastructure Companies: Roles of CEO Narcissism, Related Party Transactions, and Audit Quality. Research Horizon, 5(2), 97–108. https://doi.org/10.54518/rh.5.4.2025.765
Soesetio, Y., Rudiningtyas, D. A., Winarta, W., & Dhevi, C. (2024). Gender Diversity on Commissioner Board and Decision Making: Evidence Using Capital Raised Through IPOs. Ekuilibrium: Jurnal Ilmiah Bidang Ilmu Ekonomi, 19(1), 122–135. https://doi.org/10.24269/ekuilibrium.v19i1.2024.pp122-135
Souguir, Z., Lassoued, N., & Bouzgarrou, H. (2024). CEO Overconfidence and Tax Avoidance: Role of Institutional and Family Ownership. International Journal of Managerial Finance, 20(3), 768–793. https://doi.org/10.1108/IJMF-12-2022-0545
Sugiono, G. D., & Anggraeny, Y. (2022). Influence of Ceo Over Confidence, Gender Diversity and Profitability on Corporate Tax Avoidance: Empirical Study on Manufacturing Companies Listed on The Indonesia Stock Exchange. Journal of Applied Finance & Accounting, 9(2). https://doi.org/10.21512/jafa.v9i2.9178
Sutrisno, P., Utama, S., Anitawati Hermawan, A., & Fatima, E. (2022). Founder and Descendant vs. Professional CEO: Does CEO Overconfidence Affect Tax Avoidance in the Indonesia Case? Economies, 10(12), 1–20. https://doi.org/10.3390/economies10120327
Tuljannah, A., & Helmy, H. (2023). Tax Avoidance: The Role of Managerial Ability and CEO Overconfidence. Wahana Riset Akuntansi, 11(2), 141. https://doi.org/10.24036/wra.v11i2.124639
Zuhad, F., Wisang Christandriya, G., & Idha Prihatini, N. (2024). Optimizing Value Added Tax (VAT) Revenue in Indonesia. Journal of Justice Dialectical, 2(1), 43–55. https://doi.org/10.70720/jjd.v2i2.41
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Latifatul Hasanah, Sri Andriani
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
