Related Party Transactions

Oct 13, 2025 by vinooalluri.com 115 views

The Effect of Related Party Transactions, Profitability, Leverage, and Company Size on Company Value with Tax Avoidance as Intervening Variables in Telecommunications and Media Sectors

Introduction

The value of a company is a crucial factor in determining its success and competitiveness in the market. In the telecommunications and media sectors, companies face intense competition and must constantly adapt to changing market conditions to remain relevant. One of the key factors that affect a company's value is its financial performance, which is influenced by various variables such as related party transactions, profitability, leverage, and company size. Additionally, tax avoidance has been identified as an important intervening variable that can mediate the relationship between these variables and company value.

Background

The telecommunications and media sectors are highly competitive and rapidly evolving industries that require companies to be agile and adaptable to changing market conditions. In Malaysia and Indonesia, these sectors are dominated by a few large players, which has led to intense competition and a need for companies to optimize their business strategies to remain competitive. The value of a company is a critical factor in determining its success and competitiveness in the market, and understanding the factors that affect company value is essential for investors and company management.

Research Objectives

The primary objective of this study is to test and analyze the effect of related party transactions, profitability, leverage, and company size on company value in the telecommunications and media sectors in Malaysia and Indonesia. Additionally, this study aims to examine the role of tax avoidance as an intervening variable that can mediate the relationship between these variables and company value.

Methodology

This study used a nonprobability sampling technique with purposive sampling to select a sample of 243 data from Malaysia and 139 data from Indonesia. The data used was secondary data, which was analyzed using path analysis. The research population consisted of 6 telecommunications companies and 19 media companies registered in the IDX, while 33 companies were registered in the Malaysian exchange.

Results

The results of this study showed a variety of different influences between the two countries. The following is a summary of the main findings:

Related Party Transactions

In Malaysia, the effect on company value is positive but insignificant.
In Indonesia, the influence is positive and significant.

Profitability

In Indonesia, there is a negative and significant influence on company value, while in Malaysia, the influence of profitability is positive and significant.
This shows that despite low profitability in Indonesia, it actually contributes to the company's value.

Leverage

In Malaysia, leverage has a positive and significant influence, while in Indonesia is not significant.
This indicates that the use of debt in Malaysia is more efficient in increasing company value compared to Indonesia.

Company Size

For Malaysia, the effect of company size is positive but insignificant, while in Indonesia, the effect is negative and significant.
This shows that in Indonesia, the greater the size of the company, the smaller the company's value, which may be caused by higher operational efficiency in small companies.

Tax Avoidance

In Malaysia, tax avoidance has a positive but not significant influence, whereas in Indonesia, the effect is positive and significant.
This shows that efforts to avoid taxes in Indonesia are more effective in increasing company value.

Discussion

The results of this study provide a deeper view of the factors that affect the value of the company in the telecommunications and media sectors in Malaysia and Indonesia, as well as the important role of tax avoidance in this context. The findings of this study suggest that the effect of related party transactions, profitability, leverage, and company size on company value varies between the two countries. Additionally, the study found that tax avoidance plays a significant role in mediating the relationship between these variables and company value in Indonesia.

Conclusion

This study contributes to the existing body of knowledge on the factors that affect company value in the telecommunications and media sectors in Malaysia and Indonesia. The findings of this study provide valuable insights for investors and company management in optimizing their business strategy to increase company value in competitive markets. Additionally, the study highlights the importance of tax avoidance as an intervening variable that can mediate the relationship between related party transactions, profitability, leverage, and company size and company value.

Recommendations

Based on the findings of this study, the following recommendations are made:

Investors and company management should consider the effect of related party transactions, profitability, leverage, and company size on company value when making investment decisions.
Companies in the telecommunications and media sectors in Malaysia and Indonesia should optimize their business strategy to increase company value by focusing on profitability, leverage, and company size.
Tax avoidance should be considered as an important intervening variable that can mediate the relationship between related party transactions, profitability, leverage, and company size and company value.

Limitations

This study has several limitations that should be noted. Firstly, the study used secondary data, which may not be comprehensive or up-to-date. Secondly, the study focused on the telecommunications and media sectors in Malaysia and Indonesia, which may not be representative of other industries or countries. Finally, the study used a nonprobability sampling technique, which may not be representative of the population.

Future Research Directions

This study provides several avenues for future research. Firstly, the study highlights the importance of tax avoidance as an intervening variable that can mediate the relationship between related party transactions, profitability, leverage, and company size and company value. Future research should investigate the role of tax avoidance in other industries and countries. Secondly, the study found that the effect of related party transactions, profitability, leverage, and company size on company value varies between the two countries. Future research should investigate the factors that contribute to these differences. Finally, the study highlights the importance of company size as a factor that affects company value. Future research should investigate the relationship between company size and company value in other industries and countries.
Q&A: The Effect of Related Party Transactions, Profitability, Leverage, and Company Size on Company Value with Tax Avoidance as Intervening Variables in Telecommunications and Media Sectors

Q: What is the main objective of this study?

A: The primary objective of this study is to test and analyze the effect of related party transactions, profitability, leverage, and company size on company value in the telecommunications and media sectors in Malaysia and Indonesia. Additionally, this study aims to examine the role of tax avoidance as an intervening variable that can mediate the relationship between these variables and company value.

Q: What is related party transaction, and how does it affect company value?

A: Related party transaction refers to a transaction between a company and a related party, such as a shareholder, director, or affiliate. The study found that related party transactions have a positive but insignificant effect on company value in Malaysia, while in Indonesia, the influence is positive and significant.

Q: What is profitability, and how does it affect company value?

A: Profitability refers to a company's ability to generate profits. The study found that profitability has a negative and significant influence on company value in Indonesia, while in Malaysia, the influence of profitability is positive and significant.

Q: What is leverage, and how does it affect company value?

A: Leverage refers to a company's use of debt to finance its operations. The study found that leverage has a positive and significant influence on company value in Malaysia, while in Indonesia, the influence is not significant.

Q: What is company size, and how does it affect company value?

A: Company size refers to the size of a company in terms of its assets, sales, or employees. The study found that company size has a negative and significant influence on company value in Indonesia, while in Malaysia, the effect of company size is positive but insignificant.

Q: What is tax avoidance, and how does it affect company value?

A: Tax avoidance refers to a company's efforts to minimize its tax liability. The study found that tax avoidance has a positive but not significant influence on company value in Malaysia, while in Indonesia, the effect is positive and significant.

Q: What are the implications of this study for investors and company management?

A: The study highlights the importance of considering the effect of related party transactions, profitability, leverage, and company size on company value when making investment decisions. Additionally, the study suggests that companies in the telecommunications and media sectors in Malaysia and Indonesia should optimize their business strategy to increase company value by focusing on profitability, leverage, and company size.

Q: What are the limitations of this study?

A: This study has several limitations that should be noted. Firstly, the study used secondary data, which may not be comprehensive or up-to-date. Secondly, the study focused on the telecommunications and media sectors in Malaysia and Indonesia, which may not be representative of other industries or countries. Finally, the study used a nonprobability sampling technique, which may not be representative of the population.

Q: What are the future research directions based on this study?

A: This study provides several avenues for future research. Firstly, the study highlights the importance of tax avoidance as an intervening variable that can mediate the relationship between related party transactions, profitability, leverage, and company size and company value. Future research should investigate the role of tax avoidance in other industries and countries. Secondly, the study found that the effect of related party transactions, profitability, leverage, and company size on company value varies between the two countries. Future research should investigate the factors that contribute to these differences. Finally, the study highlights the importance of company size as a factor that affects company value. Future research should investigate the relationship between company size and company value in other industries and countries.

Q: What are the practical implications of this study for policymakers and regulators?

A: The study highlights the importance of considering the effect of related party transactions, profitability, leverage, and company size on company value when making policy decisions. Additionally, the study suggests that policymakers and regulators should consider the role of tax avoidance in mediating the relationship between these variables and company value.