Abstract:

This study examines the effect of bankruptcy risk on tax avoidance. This study also examines the moderating effect of board of commissioners’ effectiveness on the relationship between bankruptcy risk and tax avoidance. This study was conducted by taking sample from a developing country i.e. Indonesia due to its specific characteristics related to risks. Data are collected from Indonesia Stock Exchange during the periods 2014-2016; periods before tax amnesty program launched in Indonesia. The results of the study show that bankruptcy risk has a positive effect on tax avoidance. The study also finds that board of commissioners’ effectiveness weakens the positive relation between bankruptcy risk and tax avoidance. This study brings an implication of studies on effect of bankruptcy risk and tax avoidance in Indonesia and board of commissioners’ effectiveness’ moderating effect on the relation between bankruptcy risk and tax avoidance.