The impact of dividends on tax compliance in the Indonesian capital market: An artificial intelligence modeling of earnings quality and firm value

Abstract

Purpose – This study aims to examine the influence of tax accruals quality on investor perception, with dividend policy serving as a moderating variable, within the context of Indonesian manufacturing firms.

Design/methodology/approach – This research uses panel data analysis from 2015 to 2021, focusing on 154 manufacturing companies listed on the Indonesia Stock Exchange, yielding 204 valid firm-year observations. Dividend policy serves as a moderating variable to evaluate its impact on the relationship between tax accruals and investor perception.

Findings – Aggressive tax accruals negatively impact investor perceptions, highlighting opportunistic managerial behavior. In contrast, high compliance, as indicated by a low probability of tax investigation, positively affects investor views, especially regarding future tax exposure. Using decision tree modeling, simplex modeling, game theory, and AI portfolio techniques reveals the investment decision patterns within a rational decision-making framework.

Originality/value – This study integrates tax accruals quality, dividend policy, and investor perception. It highlights the importance of earnings quality in safeguarding investors from accounting distortions.