Moderating Effect of Tax Policy on Corporate Attributes and Tax Aggressiveness in Listed Manufacturing Companies in Nigeria

Onoja Emmanuel Enenche; Abbas; Saaadat

doi:10.56201/jafm.vol.12.no5.2026.p.508.521

📄 Download Paper

Moderating Effect of Tax Policy on Corporate Attributes and Tax Aggressiveness in Listed Manufacturing Companies in Nigeria

Onoja Emmanuel Enenche, Abbas, Saaadat

Abstract

Tax aggressiveness remains a critical concern for governments, tax authorities, and corporate stakeholders, particularly in developing economies like Nigeria. It involves strategies that firms employ to reduce taxable income through legal or borderline-illegal means, often exploiting regulatory loopholes. The main objective of this study is to examine the moderating effect of tax policy (tax rate) on the relationship between corporate attributes (firm size and firm age) and tax aggressiveness in listed manufacturing companies in Nigeria. The study employs an ex-post facto research design using panel data from 43 listed manufacturing firms over a ten-year period (2015–2024). Data were collected from secondary sources, including audited financial statements and annual reports. The study applies fixed effects regression to analyze the data, with tax aggressiveness measured by the effective tax rate and book-tax differences . Findings indicate that both firm size and firm age have a significant positive relationship with tax aggressiveness, with larger and older firms being more likely to engage in aggressive tax strategies. Moreover, the interaction of firm size and tax rate, as well as firm age and tax rate, significantly moderates tax aggressiveness. The study recommends that policymakers design tax policies that address the unique needs of smaller and newer firms to improve compliance and reduce tax avoidance. Additionally, firms should focus on developing robust tax strategies, with a particular emphasis on optimizing tax planning in line with regulatory reforms.

References

African Union & UNECA. (2015). Illicit financial flows and tax aggressiveness in Africa. African Union & UNECA. Agyemang, G., & Dzaka, J. (2021). Firm age and tax aggressiveness in Ghana: Evidence from the manufacturing sector. Journal of Business and Finance, 34(3), 117-135. Asongu, S. A. (2020). Tax policy and corporate tax aggressiveness in sub-Saharan Africa. Journal of African Business, 21(2), 259-277. https://doi.org/10.1080/15228916.2020.1792487 Desai, M. A., & Dharmapala, D. (2006). Corporate tax avoidance and firm value. Review of Economics and Statistics, 88(3), 537-551. https://doi.org/10.1162/rest.88.3.537 Desai, M. A., & Dharmapala, D. (2016). Taxes and corporate governance. Journal of Financial Economics, 119(1), 69-90. https://doi.org/10.1016/j.jfineco.2015.12.003 Dyreng, S. D., Hanlon, M., & Maydew, E. L. (2008). Long-run corporate tax avoidance. The Accounting Review, 83(1), 61-82. https://doi.org/10.2308/accr.2008.83.1.61 Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 301-325. https://doi.org/10.1086/467037 Frank, M. M. (2019). Corporate tax avoidance: Legal strategies and ethical concerns. Tax Journal, 45(7), 11-30. Frank, M. M., Rego, S. O., & Wilson, R. J. (2022). Firm size and tax aggressiveness: The role of tax avoidance strategies. Journal of Corporate Finance, 68, 23-39. https://doi.org/10.1016/j.jcorpfin.2021.101803 Graham, J. R. (2003). Taxes and corporate finance: A review. Review of Financial Studies, 16(4), 1075-1127. https://doi.org/10.1093/rfs/hhg007 Hanlon, M., & Heitzman, S. (2010). A review of tax research. Journal of Accounting and Economics, 50(2-3), 127-178. https://doi.org/10.1016/j.jacceco.2010.09.001 James, S., & Nobes, C. (2018). The economics of tax avoidance: Conceptual and practical issues. Oxford University Press. Khaoula, H., & Ali, A. (2022). Corporate attributes and tax aggressiveness: Evidence from North Africa. Journal of International Business and Taxation, 44(2), 85-105. https://doi.org/10.2139/ssrn.3589579 Lanis, R., & Richardson, G. (2012). Corporate social responsibility and tax aggressiveness: An empirical analysis. Journal of Accounting and Public Policy, 31(1), 1-27. https://doi.org/10.1016/j.jaccpubpol.2011.09.003 Musa, O., Ahmed, F., & Olaniran, S. (2025). Tax planning and corporate governance: The role of firm size. Journal of Financial Economics, 112(4), 543-561. https://doi.org/10.1016/j.jfin.2024.12.002 Ogbeide, O. (2017). Tax aggressiveness and corporate governance in Nigeria's manufacturing sector: A study of listed firms. Journal of African Business, 18(3), 312-335. https://doi.org/10.1080/15228916.2017.1325042 OECD. (2022). Tax avoidance and its impact on global economies. Organisation for Economic Co-operation and Development. Rego, S. O. (2003). Tax-avoidance activities of U.S. multinational corporations. Contemporary Accounting Research, 20(4), 805-833. https://doi.org/10.1506/8YYT-V7U2-TNWY- QM4W Rego, S. O. (2021). Firm size and tax aggressiveness: New evidence from global data. Accounting Review, 96(3), 61-80. https://doi.org/10.2308/accr-2019-0187 JAFM JAFM Richardson, G., & Lanis, R. (2024). The role of board characteristics in corporate tax aggressiveness. Australian Journal of Management, 45(3), 134-154. https://doi.org/10.1177/0312896222111013 Salihu, A. (2015). Tax policy and compliance in Africa: Evidence from Nigeria. African Journal of Economic Review, 8(1), 37-50. https://doi.org/10.1093/aje.0150 Watts, R. L., & Zimmerman, J. L. (1986). Positive accounting theory. Prentice Hall. Zimmerman, J. L. (2023). Book-tax differences and tax aggressiveness. Journal of Accounting Research, 61(4), 591-612

Moderating Effect of Tax Policy on Corporate Attributes and Tax Aggressiveness in Listed Manufacturing Companies in Nigeria

Abstract

References

More Articles from JOURNAL OF ACCOUNTING AND FINANCIAL MANAGEMENT