IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 9 NO. 7 2024
DOI: 10.56201/ijefm.v9.no7.2024.pg98.111

---

International Tax Planning and Financial Performance of Listed Multinational Companies in Nigeria

Akpanowo, Rita Etop, Dr. Eno Gregory Ukpong, Dr. Uwem E. Uwah

---

Abstract

The multiplicity of taxes and current unstable and volatile business environment has made companies to be aggressive in their tax planning strategies in order to remain afloat and profitable in their venture. This study was carried out to examine the effect of tax planning on financial performance of listed multinational companies in Nigeria. The independent variable being tax planning was proxied by effective tax rate, capital intensity and thin capitalization while the dependent variable being financial performance was proxied by return on assets. The research design employed in this study was ex post facto. Secondary data were used and the data employed was analysed using ordinary least square regression technique and the statistical software employed was E-View version 10. The result of the analysis revealed that effective tax rate has a significant negative effect on financial performance when proxied by return on asset.; Capital intensity has a significant positive effect on financial performance when proxied by return on asset; Thin capitalization has a significant positive. effect on financial performance when proxied by return on asset. It was therefore concluded that tax planning has significant effect on financial performance of conglomerate firms in Nigeria. It was therefore recommended among others that the management of conglomerate firms should have significant portion of their assets and investment being financed through long term debt as the firm would enjoy interest tax shield which in turn improves the financial performance of these firms.

keywords:

Tax planning capital intensity, thin capitalization, effective tax rate, financial

---

References:

Ado, A. B., Rashid, N., Mustapha, U. A., & Ademola, L. S. (2024). The impact of corporate
tax planning on the financial performance of listed companies in Nigeria. International
Journal of Economics, Management and Accounting, 29(2).
Arifa, Ali, I., Bux, R., Shar, A. K., & Soomro, R. B. (2020). Capital structure and financial
performance: Does Global financial Crisis matter?
Bachas, P., Brockmeyer, A., Dom, R. & Semelet, C. (2023). Effective tax rates and firm size.
Policy Research Working Paper, 10312.
Erasmus, G. E. & Uwikor, M. (2021). Tax planning strategies and financial performance of
quoted banks in Nigeria.
Feld, L. P., Ruf, M., & Scheuering, U. (2020). The impact of debt financing on corporate tax
planning. Journal of Banking & Finance, 117, 105748.
Foyeke, O. I., Olusola, F. S. & Aderemi, A. K. (2016). Financial structure and the profitability
of manufacturing companies in Nigeria. Journal of Accounting, Finance and Auditing
Studies, 2(3), 56-63.
Hoffman, W. H. (1961). The theory of tax planning. The Accounting Review, 36(2), 274–281.
Iormbagah, J. A., Abiahu, M. C., & Ibiam, O. (2021). Corporate tax mix and financial
performance of listed manufacturing firms in Nigeria. International Journal of
Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting
& Finance IJAF), 10(2).
Ishola, A., Folajimi, A., & Chimeruo, O. (2020). Tax planning strategies and profitability of
quoted manufacturing companies in Nigeria. Journal of Finance and Accounting, 8.
Januri, J. & Hanum, Z. (2022). The effect of tax planning and financial performance on
company value on manufacturing companies listed on the Indonesia stock exchange.
Proceedings of the 3rd International Conference of Business, Accounting, and
Economics, ICBAE, 10-11
Kawor, S. & Kportorgbi, H. (2014). Effect of tax planning on firms’ market performance:
Evidence from Listed Firms in Ghana. International Journal of Economics and
Finance, 6.
Kayode, O. & Adegbie, F. (2020). Corporate tax planning and financial performance of quoted
food and beverages firms in Nigeria. Journal of Finance and Accounting, 8(266).
Kurawa, J. M., & Saidu, H. (2018). Corporate tax and financial performance of listed Nigerian
consumer goods.
Laurencia, E. C., & Amalia, D. (2018). The effect of tax planning on financial performance of
manufacturing companies in Indonesia.
Muhammed, B. (2022). Impact of tax planning strategies on financial performance of listed
consumer goods manufacturing companies in Nigeria. Kwara State University
(Nigeria) ProQuest Dissertations Publishing, 2022.
Obiora, F. C., Onuora, J. K., & Mayah, E. (2022). Board multiplicity and corporate tax
avoidance behaviour of quoted healthcare manufacturing firms in Nigeria. Journal of
Accounting and Financial Management, 8(1).
Oeta, S., Kiai, R. & Muchiri, J. (2019). Influence of tax planning on financial performance of
manufacturing companies listed at Nairobi Securities Exchange. International Journal
of Research in Business and Social Science, 8(6), 262–270.
Ogbonna, U. G., Emmanuel, U., & Mmesoma, E. A. (2022). Effect of managerial ownership
and tax aggressiveness on financial performance of domestic systematically important
banks in Nigeria. American Journal of Economics and Business Management, 5(10).
Ogundajo, G., & Onakoya, A. (2016). Tax planning and financial performance of Nigerian
manufacturing companies. International Journal of Advanced Academic Research, 2,
2488-9849.
Olayiwola J. & Okoro S. (2021). Tax planning, corporate governance and financial
performance of selected quoted non-financial companies in Nigeria. Organizations and
Markets in Emerging Economies, 12(2), 332-352.
Olurankinse, F., & Mamidu, A. (2021). Corporate tax planning and financial performance of
development banks in Nigeria. Journal of Business Finance & Accounting, 9, 53-72.
Pniowsky J (2010). Aggressive tax planning-How aggressive is too aggressive. Thompson
Dorfman Sweatman LLP, 1-3.
Richard, D., Monday, E., & Bassey, E. U. (2019). The impact of corporate tax planning on
financial performance of listed industrial firms in Nigeria. Journal of Accounting and
Financial Management, 5(4).
Rini, G. A. I. S., Dipa, M., & Yudha, C. K. (2024). Effects of transfer pricing, tax haven, and
thin capitalization on tax avoidance. Jurnal Ekonomi & Bisnis JAGADITHA, 9(2).
Santan, S. (2016). Corporate tax avoidance and firm value: Evidence from Brazil. SSRN
Electronic Journal, 13.
Shaheen, S., & Malik, Q. A. (2012). The impact of capital intensity, size of firm and
profitability on debt financing in textile industry in Pakistan. Interdisciplinary Journal
of Contemporary Research in Business, 3(10), 1061-1066.
Tackie, G., Agyei, S. K., Bawuah, I., Adela, V., & Bossman, A. (2022). Tax planning and
financial performance of insurance companies in Ghana: The moderating role of
corporate governance. Cogent Business & Management, 9(1).
Uwah, U. E., & Akpan, D. C. (2019). Creative accounting practices and investment:
implications for the shareholders in Nigerian public companies. International Journal
of Finance and Management in Practice, 7(1), 1-21

DOWNLOAD PDF

---

Back