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

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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