Corporate Governance Characteristics and Tax Avoidance of Listed Non-financial Firms in Nigeria

Uduak E. Akpan & Josephine A. Nmesirionye

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Abstract

The primary objective of this study was to investigate the relationship between corporate governance characteristics and tax avoidance among listed industrial goods firms in Nigeria. Drawing from resource dependence theory, the research investigated how governance attributes such as board size, independence, gender diversity, and diligence affect tax avoidance practices. To achieve these objectives, the researcher employed a mixed-effects multilevel regression analysis and analysed data from a sample of 11 industrial goods firms over ten years (2014-2023). The study findings revealed that board size (SBOD, coef = 0.596, p value = 0.000) has a significant and positive relationship with tax avoidance practices of listed industrial goods firms in Nigeria during the period under study. By implication, larger board sizes enhance listed industrial goods firms’ firms’ strategic capabilities in minimising corporate tax liabilities. The variables board gender diversity, board independence and board diligence GDBOD, coef. = 0.006, p value = 0.944; INBOD, coef. = 0.116, p value = 0.195; DBOD, coef. = -0.134, p value = 0.199) respectively show no significant relationships with tax avoidance practices of listed industrial goods firms in Nigeria during the period under study. Hence, the study concluded that tax avoidance practices are other forms of agency problems that may provide management with tools, masks, and justifications for opportunistic managerial behaviours such as earnings management practices, related party transactions, and other resource-diverting activities among listed industrial goods firms in Nigeria. To this end, and given the potential negative but positive implications for government and management of listed industrial goods firms in Nigeria, respectively, the study recommended that policymakers should focus on enhancing the governance framework related to taxation and fostering collaboration between regulatory bodies, the government, and listed industrial goods firms in Nigeria.

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