Firm Attributes and Corporate Tax Aggressiveness in Nigeria
DOI:
https://doi.org/10.47672/ajf.1100Keywords:
Firm attributes, corporate tax aggressiveness.Abstract
Purpose: The study examined the impact of firm attributes on tax aggressiveness in Nigeria. The study employed the longitudinal research design.
Methodology: The population consisted of the 13 listed commercial banks quoted on the Nigerian Stock Exchange. The final sample, after excluding firms with incomplete data, consisted of 13 Nigerian banks for a period of nine financial years (2012-2020). Data for the study were collected from the annual reports and financial statements of the selected banks. Two alternative measures of tax aggressiveness (GAAP-ETR and D_BTD) were employed and the data was analysed using the panel data regression technique while MAPE and Theil's inequality coefficient was used in evaluating the forecast abilities of the models.
Findings: The findings of the analysis revealed that firm size and firm complexity have significant positive relationship with tax aggressiveness, firm age and profitability asserted significant negative impact respectively on tax aggressiveness.
Recommendations: The study recommends that regulatory bodies and tax authorities should beam their searchlight on the tax saving strategies of small size companies with a view to discouraging aggressive tax avoidance schemes. It was also recommended that regulators should increase their monitoring of the older firms as a strategy for reducing potential tax evasions while encouraging appropriate tax savings strategies to ensure greater tax compliance.
Downloads
References
Alkurdi, A. & Mardini, G.H. (2020). The impact of ownership structure and the board of directors' composition on tax avoidance strategies: Empirical evidence from Jordan. Journal of Financial Reporting and Accounting, 18(4), 795-812.
Aronmwan, E.J. & Okafor, C. (2019). Corporate tax avoidance: Review of measures and prospects. International Journal of Accounting and Finance (IJAEF), 8(2):21-42.
Atu, O.G., Uniamikogbo, E. & Atu, O.O.K. (2018). Firm attribute and tax aggressiveness in the Nigerian banking sector. Journal of Taxation and Economic Development. 17(1): 161-178.
Badertscher, B.A., Katz, S.P., Rego, S.O. & Wilson, R.J. (2016). Conforming tax avoidance and capital market pressure. Retrieved from http://papers.ssrn.com
Barinov, A., Park, S.S. & Yildizhan, C. (2016). Firm complexity and post earnings announcement drift. MPRA Paper 91421, University Library of Munich, Germany revised 14 Dec. 2018.
Cabello, O.G., Gaio, L.E. & Watrin, C. (2019). Tax avoidance in management-owned firms: Evidence from Brazil. International Journal of Managerial Finance, 25, 1-14. https://doi.org/10.1108/IJMF-04-2018-0117
Callihan, D. (1994). Corporate effective tax rates: A synthesis of the literature. Journal of Accounting Literature, 13(2), 1-43.
Chen, K.P. & Chu, C.Y.C. (2005). Internal control vs. external manipulation: A model of corporate income tax evasion. RAND Journal of Economics. 36(4): 151-164.
Chen, S., X. Chen, Q. Cheng & T. Shevlin (2010). Are family firms more tax aggressive than non-family firms". Journal of Financial Economics, 95(3), 41-61.
Chen, Y., Ge, R., Louis, H. & Zolotoy, L. (2019). Stock liquidity and corporate tax avoidance. Review of Accounting Studies, Springer, 24(1): 309-340.
Chytis, Tasios & Gerantonis (2019). Tax avoidance and corporate governance attributes: Evidence from listed companies in Greece. 15th International Conference on Enterprise, Systems, Accounting, Logistics and Management (15th ICESALM 2018) 24-26 June, Kefalonia, Greece.
Desai, M.A. & Dharmapala, D. (2006). Corporate tax avoidance and high-powered incentives. Journal of Financial Economics, 79(2), 145-179.
Desai, M.A. & Dhamarpala, D. (2009). Corporate tax avoidance and high-powered incentives. Journal of Financial Economics, 79(2), 145-179.
Desai, M.A. & Dharmapala, D. (2009). Corporate tax avoidance and firm value. Review of Economics and Statistics, 91(1), 537-546.
Desai, M., Dyck, A. & Zingales, L. (2007). Theft and taxes. Journal of Financial Economics, 84(3), 591-623.
Frank, M., Lynch, L. & Rego, S. (2009). Tax reporting aggressiveness and its relation to aggressive financial reporting. The Accounting Review, 84(2), 467-496.
Graham, J. & Tucker, A. (2006). Tax shelters and corporate debt policy. Journal of Financial Economics. 81, 563-594.
Hanlon, M. & Heitzman, S. (2010). Tax research: Real effects, reporting effects and governance. MIT Working paper.
Hutchens, M., Rego, S.O. & Williams, B. (2019). Tax avoidance, uncertainty and firm risk. SSRN Electronic Journal, 1-46. DOI: 10.2139/ssrn.3348559.
Ilaboya, O.J., Obasi, R. & Izevbekhai, M.O. (2016). Firm level characteristics and effective tax rate. ICAN academic conference proceedings, 573-593.
Irianto, B.S., Sudibyo, Y.A. & Wafirli, A. (2017). The influence of profitability, leverage, firm size and capital intensity towards tax avoidance. International Journal of Accounting and Taxation, 5(2), 33-41.
Izevbigie, J.N. & Ebohon, G.E. (2019). Internally generated revenue and state viability: comparative analysis of two states in Nigeria. International Journal of Development and Management Review (INJODEMAR), 14(1), 96-106.
Jensen, M.C. & Meckling, W.H. (1998). Divisional performance measurement: foundations of organizational strategy. Cambridge, MA: Harvard University Press.
Jihene, F. & Moez, D. (2019). The moderating effect of audit quality on CEO compensation and tax avoidance: Evidence from Tunisian context. International Journal of Economics and Financial Issues, 9(1), 131-139.
Kraft, A. (2014). What really affects German firms' effective tax rate? International Journal of Financial Research, 5(3), 1-19.
Lanis, R., Richardson, G. & Taylor, G. (2015). Board of director gender and corporate tax aggressiveness: An empirical analysis. Journal of Business Ethics, 6(3), 115-132.
Lee, B.B., Dobiyanski, A. Minton, S. (2015). Theories and empirical proxies for corporate tax avoidance. Journal of Applied Business and Economics, 17(3), 21-34.
Martinez, A.L., Reinoso, J.E.T., Antonio, R.M. & Santos, R.B. (2019). Financial derivatives, hedge accounting and tax aggressiveness in Brazil. SSRN Electronic Journal, 1-27. Doi: 10.2139/ssrn.3406683.
McGuire, S., Omer, T. & Wang, D. (2012). Tax avoidance: does tax-specific industry expertise make a difference? The Accounting Review, 87(3): 975-1003.
Mills, L., Erickson, M. & Maydew, E. (1998). Investments in tax planning. The Journal of the American Taxation Association, 20(1), 1-20.
Minnick, K. & Noga, T. (2010). Do corporate governance characteristics influence tax management? Journal of Corporate Finance, 16(2), 703-718.
Musa, S.U., Saad, N. & Ibrahim, I. (2017). Compliance behaviour of small corporate taxpayers in Nigeria: A pilot study. International Journal of Research in IT, Management and Engineering, 07(1), 1-6.
Nwaobia, A. & Jayeoba, O. (2017). Tax planning and firms' liquidity. Retrieved from www.ssrn.com
Nworu, O.C. (2017). Export: Improving Nigerian government revenue base and economic diversification. Human Resource Management Research, 7(1), 65-73.
Obi, C.K. (2018). Revenue generation in Nigeria: Diversifying from primary sectors to non-primary sectors. ACTA Universitatis Danubius, 14(1), 168-178.
Ofoegbu, G.N., Akwu, D.O. & Oliver, O. (2016). Empirical analysis of effect of tax revenue on economic development of Nigeria. International Journal of Asian Social Science, 6(10), 604-613.
Ogbeide, S.O. (2017). Firm characteristics and tax aggressiveness of listed firms in Nigeria: Empirical evidence. International Journal of Academic Research in Public Policy and Governance, 4(1), 556-569.
Ogundajo, G.O. & Onakoya, A.B. (2016). Tax planning and financial performance of Nigerian manufacturing companies. International Journal of Advanced Academic Research Social and Management Sciences, 2(7), 64-80.
Oladipupo, A.O. & Obazee, U. (2016). Tax knowledge, penalties and tax compliance in small and medium scale enterprises in Nigeria. Business, 8, 1-9. http;//dx.doi.org/10.4236/ib.2016.81001
Olaoye, C.O. & Ekundayo, A.T. (2019). Effects of tax audit on tax compliance and remittance of tax revenue in Ekiti State. Open Journal of Accounting, 8, 1-17. https://doi.org/10.4236/ojacct.2019.81001
Onyali, C.I. & Okafor, T.G. (2018). Effect of corporate governance mechanisms on tax aggressiveness of quoted manufacturing firms on the Nigerian Stock Exchange. Asian Journal of Economics, Business and Accounting, 8(1), 1-20.
Overesch, M. & Wamser, G. (2010). Corporate tax planning and thin-capitalisation rules: Evidence from a quasi-experiment. Applied Economics, 42(5), 563-573. doi:10.1080/000368407017044
Owolabi, S.A. and Obida, S.S. (2012). Liquidity management and corporate profitability: Case study of selected manufacturing companies listed on the Nigerian Stock Exchange. Business Management Dynamics, 2(2), 10-25.
Oyeleke, O.E.O., Erin, O. & Emeni, F. (2016). Female directors and tax aggressiveness of listed banks in Nigeria. 3rd International Conference on African Development Issues Covenant University Press, 293-299.
Pratama, A. (2017). Company characteristics, corporate governance and aggressive tax avoidance practice: A study of Indonesian companies. Review of Integrative Business and Economics Research, 6(4), 70-81.
Priya, K. & Nimalathasan, B. (2013). Liquidity management and profitability: A case study of listed manufacturing companies in Sri Lanka. International Journal of Technological Exploration and Learning, 2(4), 161-165.
Rego, S. (2003). Tax avoidance activities of U.S. multinational corporations. Contemporary Accounting Research, 20(4), 805-833.
Rego, S.O. & R. Wison (2012). Equity risk incentives and corporate tax aggressiveness. Journal of Accounting Research, 50(3), 775-810.
Salaudeen, Y.M. (2017). Corporate effective tax rates in the financial services sector: Evidence from Nigeria. International Journal of Accounting and Taxation, 5(1), 68-88. https://doi.org/10.15640/ijat.v5n1a6
Salaudeen, Y.M., Ejeh, B.U. (2018). Equity ownership structure and corporate tax aggressiveness: The Nigerian context. Research Journal of Business and Management, 5(2), 90-99. http://doi.org/10.17261/pressacademia.2018.828
Salaudeen, M. & Eze, U. (2018). Firm specific determinants of corporate effective tax rate of listed firms in Nigeria. Journal of Accounting and Taxation, 10(2), 19-28.
Salawu, R.O. & Adedeji, Z.A. (2017). Corporate governance and tax planning among non-financial quoted companies in Nigeria. African Research Review, 11(3), 42-59.
Salihu, I.A., Annuar, H.A. & Sheikh Obid, S.N. (2015). Foreign investors' interests and corporate tax avoidance: Evidence from an emerging economy. Journal of Contemporary Accounting and Economics, 11(2), 138-147.
Slemrod, J. (2004). The economics of corporate tax selfishness. National Tax Journal. 99(2), 12-32.
Vieira, A. (2013). Corporate governance and taxes, dissertation, school of economics and management, University of Porto
Wabha, H. & Elsayed, K. (2010). Firm complexity and corporate board size: Testing the moderating effect of board leadership structure. Corporate Ownership and Control. 7(4), 114-126.
Wang, X. (2012). Tax avoidance, corporate transparency, and firm value. University of Texas Austin, Working Paper.
Watts, R. & Zimmermann, J. (1986). Positive accounting theory. New Jersey: Prentice Hall.
Ying, T., Wright, B. & Huang, W. (2017). Ownership structure and tax aggressiveness of Chinese listed companies. International Journal of Accounting and Information Management, 2, 1-28. https://doi.org/10.1108/IJAIM-072016-0070.
Zaitul, Z. & Illona, D. (2019). Tax aggressiveness and politically connected company in social sciences on sustainable development for world challenge: The first economics, law, education and humanities international conference, KnE Social Sciences, pages 10-19. Doi10.18502/kss.v3i14.4294.
Zemzem, I.A. & Ftouhi, K. (2013). The effects of board of directors' characteristics on tax aggressiveness. Research Journal of Finance and Accounting, 4(4), 140-147.
Zheng, S. (2017). Can corporate diversification induce more tax avoidance? Journal of Multinational Financial Management, 41, 47-60. https://doi.org/10.1016/j.mulfin.201
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Dr. Ivie Ologhosa Ogbeide, Prof. John Obiora Anyaduba, Dr. Obehioye Usiomo Akogo
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
