Corporate Governance Mechanisms and Tax Avoidance of Quoted Non-Financial Firms in Nigeria

Abstract

This research study was carried out to empirical assess the impact of certain corporate governance attributes on tax avoidance in Nigeria. The aim was to ascertain the degree to which firms dodge paying taxes and the efforts government has been making in curbing such financial termites which has been draining government funds needed to provide basic infrastructures for the citizenry. Annual secondary data totally eight hundred and seventy six (876) firm-year observations which cover the period 2009 to 2020 of seventy three (73) non-financial listed firms quoted on the floor of the Nigerian Exchange Group (NXG) are used in the study. Tax avoidance, represented by cash effective tax rate (CETR), is the dependent variable; Board Size, Board Diversity, Board Independence, Board Meetings, Board Political Affiliations, Chief Executive Officer (CEO) Overconfidence and Chief Executive Officer (CEO) Military Experience are the independent variables while Capital Intensity, Firm Size, Return on Assets and Thin Capitalization are the control variables. The regression results of the GMM with dummy variables. The GMM regression results indicate that Lag of Cash Effective Tax Rate, Board Diversity and Thin Capitalization positively and significantly influenced tax avoidance; Board Independence, Chief Executive Officer (CEO) Overconfidence and Chief Executive Officer (CEO) Military Experience influence on tax avoidance are negatively significant while Board Size, Board Meetings, Board Political Affiliations and Capital Intensity are not significant at all. The study also finds that firms avoided tax less after the adoption of IFRS; that firms avoided tax more in 2011 and that the Oil and Gas sector avoided tax more than other sectors. The study recommends, among others, that the Nigerian government needs to be abreast with the reality of huge amount of money lost to tax avoidance as the ca

Keywords

References