The Effect of Audit Quality and Managerial Ownership on Tax Compliance With Company Size As A Moderating Variable

This study aims to examine the effect of audit quality and managerial ownership on tax compliance, as well as the role of company size as a moderating variable. The research was conducted on energy sector manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the period 2019–2023. Using a purposive sampling method, 43 companies were selected as samples, resulting in a total of 215 observational data points. Data analysis was performed using panel data regression with the EViews 12 software, and the Fixed Effect Model was determined as the best-fit model through the Chow Test and Hausman Test. The results of this study indicate that audit quality has a positive and significant effect on tax compliance. High-quality audits conducted by reputable public accounting firms are proven to enhance the transparency and credibility of financial statements, thereby limiting management's opportunities to engage in tax avoidance practices. Furthermore, managerial ownership also has a positive and significant effect on tax compliance. The greater the proportion of shares owned by management, the stronger the alignment of interests between managers and shareholders, which encourages managers to avoid aggressive tax avoidance practices that could expose the company to legal and reputational risks. Regarding the moderating role of company size, the findings reveal that company size does not significantly moderate the effect of audit quality on tax compliance. However, company size significantly moderates the effect of managerial ownership on tax compliance in a quasi-moderation manner, where larger companies reinforce the positive relationship between managerial ownership and tax compliance due to greater public scrutiny, regulatory pressure, and reputational risk exposure. These findings contribute to the development of agency theory in the taxation context and provide practical implications for tax authorities in designing effective tax compliance improvement strategies.