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Riana Rachmawati Dewi

Sri Hartono

Endang Masitoh

Abstract

This research investigates the influence of tax avoidance, tax risk, and audit quality on firm value, with financial performance serving as a mediating variable. The study is motivated by the need to enhance firm value in the face of increasing government tax policies and declining economic conditions during the COVID-19 pandemic. The research adopts a quantitative approach using Partial Least Square Structural Equation Modelling (PLS-SEM) to analyze data from 40 companies listed on the Indonesia Stock Exchange (IDX) from 2019 to 2023. The results show that tax avoidance harms financial performance, but positively influences firm value. Audit quality positively affects both financial performance and firm value. However, tax risk does not have a significant effect on either financial performance or firm value. Financial performance partially mediates the relationship between tax avoidance, audit quality, and firm value, indicating that strong financial performance enhances the positive impact of audit quality on firm value. The findings highlight the importance of tax management and audit quality in maintaining financial performance and enhancing firm value.

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