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Post IFRS Adoption Effect of Firm Attributes on Tax Aggressiveness of listed Nigerian Manufacturing Companies

ADEOLA, Adelani Stepehen PhD

Abstract

Aggressive tax planning became rampant after the adoption of International Financial Reporting Standards (IFRSs) in Nigeria Due to numerous disclosure requirements from IFRSs, firms engage in aggressive tax strategies in order to minimize tax burdens through specific firm attributes. Therefore, this study examines the impact of firm attributes on tax aggressiveness of listed Nigerian manufacturing firms after the adoption of IFRS. Ex-post facto research design was used. Panel data extracted from the annual financial reports of the 20 listed Nigerian manufacturing companies from 2012 to 2022 post-IFRS eras were employed. The sample size of 20 companies was selected using maximum variation purposive sampling technique. Descriptive statistics, panel unit root test, correlation and fixed effect regression analysis were used to test the hypotheses. Fixed effect regression analyses revealed that: firm age t= -2.018 (p=0.037) and firm size t=3.862 (p=0.003) and ROA t= 2.976 (p=0.027) indicated that firm size and ROA have positive significant effect on tax aggressiveness while firm age has negative significant effect on tax aggressiveness. Leverage t=0.199 (p=0.843) while liquidity t=-0.631 (p=0.529) indicated that leverage and liquidity have positive and negative insignificant effect on tax aggressiveness respectively. F= 11.564 (p=0.000) indicated that all firm attributes under post IFRS adoption jointly have significant effect on aggressive practices. The study therefore concluded that firm attributes had significant effect on tax aggressiveness under post-IFRS adoption in listed Nigerian manufacturing companies. The study therefore recommended that firms should strengthen internal control systems to monitor tax related decision effectively without compromising tax reputation and financial reporting disclosure requirements.

Keywords

Firm AgeFirm SizeLeverageProfitabilityEffective Tax Rate.

References

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