Unveiling The Effects of Financial Distress, Tax Avoidance, and Political Connections on Firm Value

Authors

  • Rina Nurjanah Universitas Pelita Bangsa
  • Adibah Yahya Universitas Pelita Bangsa
  • Taufik Hidayat Universitas Pelita Bangsa
  • Meli Andriyani Universitas IPWIJA

DOI:

https://doi.org/10.34209/equ.v28i2.11049

Abstract

This study examines the interplay between political connections, financial distress, Tax Avoidance, and a company's firm value. The primary objective is to analyze how these factors influence firm value, particularly focusing on the effects of political connections on financial distress and Tax Avoidance. The research was conducted on 33 companies listed on the Jakarta Islamic Index (JII70) from 2022 to 2024, utilizing e-Views as the analytical tool. The findings reveal that political connections do not significantly impact firm value or Tax Avoidance; however, they do have a negative effect on financial distress. Conversely, financial distress negatively affects both firm value and Tax Avoidance, while Tax Avoidance does not influence firm value. These results suggest that a company's fundamental factors and internal conditions play a more critical role in determining its value than political connections. Consequently, the study highlights the importance for companies to prioritize robust financial performance and effective business strategies over reliance on transient political connections.

Keywords: Financial Distress; Firm Value; Political Connection; Tax Avoidance.

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Published

2025-11-30

Issue

Vol. 28 No. 2 (2025): EQUITY

Section

Articles

License

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

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