IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 10 NO. 2 2024
DOI: https://doi.org/10.56201/ijebm.v10.no2.2024.pg292.323

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Tax Avoidance and Earnings Management of Quoted Non-Financial Firms in Nigeria

Lawrence, U. Egbadju

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Abstract

This study investigates the relationship between tax avoidance and earnings management of listed non-financial firms in Nigeria. Using secondary data over the period from 2007 to 2022 of 75 of those firms on the floor of the Nigerian Exchange Group (NXG), the estimated generalized least squares (EGLS) results reveal that six of the variables (CUT, LGCUT, SHT, CT, ED and CTO) are positively and statistically significant with earnings management. This means the more managers engage in managing earnings, the higher the effective tax rates or the lower the tax they avoid. Five variables (LGCAT, BTD, PD, DBTD and PBTD) are negatively and statistically significant with earnings management. This means the more managers engage in managing earnings, the lower the effective tax rates or the higher the tax they avoid. Seven of the variables (LCUT, CAT, LCAT, HS, DT, BTDL and TO) are statistically not significant. This study draws conclusions and makes some recommendations.

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References:

Abubakar, A. H., Mansor, N. & Wan-Mohamad, W. I. A. (2021). Corporate tax avoidance, free
cash flow and real earnings management: Evidence from Nigeria. Universal Journal of
Accounting and Finance, 9(1), 86 - 97.

Amidu, M. and Yorke, S.M. (2017). Tax avoidance and earnings management of firms in Ghana:
Does the funding strategy matter?’, Int. J. Critical Accounting, 9(3), 238–264.

Becker, T. E. (2005). Potential problems in the statistical control of variables in organizational
research: A qualitative analysis with recommendations. Organizational Research
Methods, 8 (3), 274-289

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