Digital transformation and regulatory arbitrage: How cash holdings facilitate corporate tax avoidance

Abdani, Fadlil, Afani, Moh., Cahya, Rama Putra Adi, Nisa'yanayiroh, Izzun and Sriphol, Ananda (2026) Digital transformation and regulatory arbitrage: How cash holdings facilitate corporate tax avoidance. Journal of Accounting and Business Education, 11 (1). pp. 47-68. ISSN 2528-729X

Preview

Text 29413.pdf - Published Version Available under License Creative Commons Attribution Share Alike. Download (620kB) | Preview

Abstract

This study aims to examine the effect of digital transformation on tax avoidance and the mediating role of cash holdings in public companies in Indonesia. Using a purposive sampling technique, a final sample of 2,040 firm-year observations was obtained from non-financial companies listed on the Indonesia Stock Exchange for the 2020–2024 period. The data were analyzed using panel data regression, a mediation approach, and two-stage least squares (2SLS) to address potential endogeneity. The results demonstrate that digital transformation consistently and robustly reduces tax avoidance through a direct channel while increasing cash holdings. Cash holdings partially mediate this relationship in a competitive manner, where larger cash reserves actually increase tax avoidance, consistent with the pecuniary motive hypothesis. Nevertheless, the total effect of digital transformation on tax avoidance remains negative. These findings provide crucial implications for tax authorities, particularly in developing countries, highlighting the necessity of technology-based oversight mechanisms to enhance corporate tax compliance and overcome administrative capacity limitations.

Item Type:	Journal Article
Keywords:	digital transformation; cash holding; tax avoidance
Subjects:	15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1501 Accounting, Auditing and Accountability > 150107 Taxation Accounting
Divisions:	Faculty of Economics > Department of Accounting
Depositing User:	Fadlil Abdani
Date Deposited:	29 Oct 2026 15:49

Downloads

Origin of downloads

Actions (login required)

View Item