Tax Amnesty as a Control Variable Affects The Relationship between Domestic Institutional Shareholders and the Firm Value.

Abstract

The number of shares owned by the domestic institutional shareholders influences the firm value. The next question is whether this relationship is linear or nonlinear. When the tax amnesty policy enacted, management will adjust the strategies that influence on the firm value. The tax amnesty policy also influences the relationship between the domestic institutional shareholders and the firm value. By using the manufacturing firm listed in the Indonesia Stock Exchange, the comparative casual method, and the tax amnesty policy as a control variable, this study find out that the relationship between the domestic institutional shareholders and the firm value is nonlinear and inverted U-shaped, both with and without the tax amnesty policy. When using the tax amnesty policy as a control variable, the relationship between the domestic institutional shareholders and the firm value is getting weaker. It is estimated that this weakening is a management reaction to the tax amnesty policy whose influence is more significant compared to the influence of the domestic institutional shareholders on the firm value.