Tax Planning and Firms’ Value in Nigeria
October 10, 2023
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The connection between tax preparation and firm’s value matters. Thus, this study examined tax planning proxy with income effective tax and cash effective tax influence on firm value proxy with Tobins Q in Nigeria. The researchers sampled forty-four non-financial firms listed on the Nigeria Exchange Group over the period 2011 to 2020. The variables data extracted from sampled firm’s annual report and account were subjected to panel multiple regressions analysis after rigorous data exploration. The study finds that income effective tax and cash effective tax has insignificant adverse impact on firm value for the period examined. The study recommends that, management should examine their tax savings activities to enable them to improve their firm’s value.
Sinebe, M. T., & Emudainohwo, O. B. (2023). Tax Planning and Firms’ Value in Nigeria. International Journal on Economics, Finance and Sustainable Development, 5(10), 24–36. https://doi.org/10.31149/ijefsd.v5i10.4855
1. Adegboyegun, A. E., Alade, M. E., Ben-Caleb, E., Ademola, A. O., Eluyela, D. F., & Oladipo, O. A. (2020). Integrated reporting and corporate performance in Nigeria: Evidence from the banking industry. Cogent Business & Management, 7(1), 1736866.
2. Akintoye, I. R., Adegbie, F. F., & Onyeka-Iheme, C. V. (2020). Tax planning strategies and profitability of quoted manufacturing companies in Nigeria. Journal of Finance and Accounting, 8(3), 148-157.
3. Andreoni, J., Erard, B., & Feinstein, J. (1998). Tax compliance. Journal of economic literature, 36(2), 818-860.
4. Auerbach, A. J. (1997). The future of fundamental tax reform. The American Economic Review, 87(2), 143-146.
5. Barro, R. J. (1990). Government spending in a simple model of endogeneous growth. Journal of political economy, 98(5, Part 2), S103-S125.
6. Belz, T., Hagen, D. V., & Steffens, C. (2019). Taxes and firm size: Political cost or political power?. Journal of Accounting Literature, 42(1), 1-28.
7. Christina, S. (2019). The effect of corporate tax planning on firm value. Accounting and Finance Review, 4(1), 01-04.
8. Chukwudi, U. V., Okonkwo, O. T., & Asika, E. R. (2020). Effect of tax planning on firm value of quoted consumer goods manufacturing firms in Nigeria. International Journal of Finance and Banking Research, 6(1), 1-10.
9. Chytis, E., Tasios, S., Georgopoulos, I., & Hortis, Z. (2019). The relationship between tax avoidance, company characteristics and corporate governance: Evidence from Greece. Corporate Ownership and Control, 16(4), 77-86.
10. Dharmapala, D., & Khanna, V. (2013). Corporate governance, enforcement, and firm value: evidence from India. The Journal of Law, Economics, & Organization, 29(5), 1056-1084.
11. Fagbemi, T. O., Olaniyi, T. A., & Ogundipe, A. A. (2019). The corporate tax planning and financial performance of systemically important banks in Nigeria.
12. Feld, L. P., & Frey, B. S. (2007). Tax compliance as the result of a psychological tax contract: The role of incentives and responsive regulation. Law & Policy, 29(1), 102-120.
13. Ftouhi, K., Ayed, A., & Zemzem, A. (2015). Tax planning and firm value: evidence from European companies. International Journal Economics & Strategic Management of Business Process, 4(1), 73-78.
14. Fu, L. Rajeev, S, & Parkash, M. (2016). Tobin’s Q ratio and firm’s performance. International Research journal of applied Finance, www.irjaf.com VII (4), 14-25.
15. Hasseldine, J., & Morris, G. (2013). Corporate social responsibility and tax avoidance: A comment and reflection. In Accounting Forum (Vol. 37, No. 1, pp. 1-14). Taylor & Francis.
16. Hidayat, R., Wahyudi, S., Muharam, H., Shaferi, I., & Puspitasari, I. (2019). The improve level of firm value with liquidity, debt policy and investment in indonesian emerging market. Revista Espacios, 40(40).
17. Izevbekhai, M.O. & Odion, A.O. (2018). Tax planning and firm value. Nigerian Academy of Management Journal, 13(1), 94-119
18. Keynes, J. M. (1936). The supply of gold. The Economic Journal, 46(183), 412-418.
19. Kirkpatrick, A. K., & Radicic, D. (2020). Tax planning activities and firm value: A dynamic panel analysis. In Advances in Taxation (Vol. 27, pp. 103-123). Emerald Publishing Limited.
20. Myles, G. D. (2000). Taxation and economic growth. Fiscal studies, 21(1), 141-168.
21. Oeta, S., Kiai, R., & Muchiri, J. (2019). Influence of tax planning on financial performance of manufacturing companies listed at Nairobi Securities Exchange. International Journal of Research in Business and Social Science (2147-4478), 8(6), 262-270.
22. Omesi, I., & Appah, E. (2021a). Corporate tax planning and firm value of listed consumer goods companies in Nigeria. IOSR Journal of Business and Management (IOSR-JBM), 23(02), 42-51.
23. Omesi, I., & Appah, E. (2021b). Tax Structure And Economic Growth In Nigeria: An Auto Regressive Distributive Lag Evidence From 1980–2018. BW Academic Journal, 2021(2021).
24. Payne, D. M., & Raiborn, C. A. (2018). Aggressive tax avoidance: A conundrum for stakeholders, governments, and morality. Journal of Business Ethics, 147, 469-487.
25. Sainani, K. L. (2012). Dealing with non-normal data. Pm&r, 4(12), 1001-1005.
26. Sinebe, M.T. (2023). Firm Performance and Dividend Policy: Evidence from Listed Service Firms in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 4(6), 129-139.
27. Sinebe, M.T. & Akpomiemie, A.O. (2023). Tax Planning: The Mediating Effect of Profitability, Return on Assets and Firm Value. International Journal on Economics, Finance and Sustainable Development, 5(6), 232-243.
28. Timothy, O.U., Izilin, M.O. & Ndifereke, B.A. (2020). Corporate tax planning, board compensation and firm value. Accounting and Taxation Review, 4(3), 11-28.
29. Tonbraladoh, S. M. (2021). Tax Evasion and Avoidance and Economic Development: Evidence from Nigeria. Multidisciplinary Journal of Management Sciences, 3(1), 172-185.
30. Umobong, A. A. & Agburuga, U. T. (2018). Corporate tax and corporate social responsibility of firms in Nigeria. Research Journal of Finance and Accounting, 9 (10), 8 – 25.
31. Wahab, N. S. A., & Holland, K. (2015). The persistence of book-tax differences. The British Accounting Review, 47(4), 339-350.
32. Wei Ling, T., & Abdul Wahab, N. S. (2018). Roles of tax planning in market valuation of corporate social responsibility. Cogent Business & Management, 5(1), 1482595.
33. Weld, W. C., Michaely, R., Thaler, R. H., & Benartzi, S. (2009). The nominal share price puzzle. Journal of Economic Perspectives, 23(2), 121-142.
34. Zhu, N., Mbroh, N., Monney, A. & Bonsu, M.O.A. (2019). Corporate tax avoidance and firm performance. European Scientific Research, 15(7), 61- 70.
2. Akintoye, I. R., Adegbie, F. F., & Onyeka-Iheme, C. V. (2020). Tax planning strategies and profitability of quoted manufacturing companies in Nigeria. Journal of Finance and Accounting, 8(3), 148-157.
3. Andreoni, J., Erard, B., & Feinstein, J. (1998). Tax compliance. Journal of economic literature, 36(2), 818-860.
4. Auerbach, A. J. (1997). The future of fundamental tax reform. The American Economic Review, 87(2), 143-146.
5. Barro, R. J. (1990). Government spending in a simple model of endogeneous growth. Journal of political economy, 98(5, Part 2), S103-S125.
6. Belz, T., Hagen, D. V., & Steffens, C. (2019). Taxes and firm size: Political cost or political power?. Journal of Accounting Literature, 42(1), 1-28.
7. Christina, S. (2019). The effect of corporate tax planning on firm value. Accounting and Finance Review, 4(1), 01-04.
8. Chukwudi, U. V., Okonkwo, O. T., & Asika, E. R. (2020). Effect of tax planning on firm value of quoted consumer goods manufacturing firms in Nigeria. International Journal of Finance and Banking Research, 6(1), 1-10.
9. Chytis, E., Tasios, S., Georgopoulos, I., & Hortis, Z. (2019). The relationship between tax avoidance, company characteristics and corporate governance: Evidence from Greece. Corporate Ownership and Control, 16(4), 77-86.
10. Dharmapala, D., & Khanna, V. (2013). Corporate governance, enforcement, and firm value: evidence from India. The Journal of Law, Economics, & Organization, 29(5), 1056-1084.
11. Fagbemi, T. O., Olaniyi, T. A., & Ogundipe, A. A. (2019). The corporate tax planning and financial performance of systemically important banks in Nigeria.
12. Feld, L. P., & Frey, B. S. (2007). Tax compliance as the result of a psychological tax contract: The role of incentives and responsive regulation. Law & Policy, 29(1), 102-120.
13. Ftouhi, K., Ayed, A., & Zemzem, A. (2015). Tax planning and firm value: evidence from European companies. International Journal Economics & Strategic Management of Business Process, 4(1), 73-78.
14. Fu, L. Rajeev, S, & Parkash, M. (2016). Tobin’s Q ratio and firm’s performance. International Research journal of applied Finance, www.irjaf.com VII (4), 14-25.
15. Hasseldine, J., & Morris, G. (2013). Corporate social responsibility and tax avoidance: A comment and reflection. In Accounting Forum (Vol. 37, No. 1, pp. 1-14). Taylor & Francis.
16. Hidayat, R., Wahyudi, S., Muharam, H., Shaferi, I., & Puspitasari, I. (2019). The improve level of firm value with liquidity, debt policy and investment in indonesian emerging market. Revista Espacios, 40(40).
17. Izevbekhai, M.O. & Odion, A.O. (2018). Tax planning and firm value. Nigerian Academy of Management Journal, 13(1), 94-119
18. Keynes, J. M. (1936). The supply of gold. The Economic Journal, 46(183), 412-418.
19. Kirkpatrick, A. K., & Radicic, D. (2020). Tax planning activities and firm value: A dynamic panel analysis. In Advances in Taxation (Vol. 27, pp. 103-123). Emerald Publishing Limited.
20. Myles, G. D. (2000). Taxation and economic growth. Fiscal studies, 21(1), 141-168.
21. Oeta, S., Kiai, R., & Muchiri, J. (2019). Influence of tax planning on financial performance of manufacturing companies listed at Nairobi Securities Exchange. International Journal of Research in Business and Social Science (2147-4478), 8(6), 262-270.
22. Omesi, I., & Appah, E. (2021a). Corporate tax planning and firm value of listed consumer goods companies in Nigeria. IOSR Journal of Business and Management (IOSR-JBM), 23(02), 42-51.
23. Omesi, I., & Appah, E. (2021b). Tax Structure And Economic Growth In Nigeria: An Auto Regressive Distributive Lag Evidence From 1980–2018. BW Academic Journal, 2021(2021).
24. Payne, D. M., & Raiborn, C. A. (2018). Aggressive tax avoidance: A conundrum for stakeholders, governments, and morality. Journal of Business Ethics, 147, 469-487.
25. Sainani, K. L. (2012). Dealing with non-normal data. Pm&r, 4(12), 1001-1005.
26. Sinebe, M.T. (2023). Firm Performance and Dividend Policy: Evidence from Listed Service Firms in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 4(6), 129-139.
27. Sinebe, M.T. & Akpomiemie, A.O. (2023). Tax Planning: The Mediating Effect of Profitability, Return on Assets and Firm Value. International Journal on Economics, Finance and Sustainable Development, 5(6), 232-243.
28. Timothy, O.U., Izilin, M.O. & Ndifereke, B.A. (2020). Corporate tax planning, board compensation and firm value. Accounting and Taxation Review, 4(3), 11-28.
29. Tonbraladoh, S. M. (2021). Tax Evasion and Avoidance and Economic Development: Evidence from Nigeria. Multidisciplinary Journal of Management Sciences, 3(1), 172-185.
30. Umobong, A. A. & Agburuga, U. T. (2018). Corporate tax and corporate social responsibility of firms in Nigeria. Research Journal of Finance and Accounting, 9 (10), 8 – 25.
31. Wahab, N. S. A., & Holland, K. (2015). The persistence of book-tax differences. The British Accounting Review, 47(4), 339-350.
32. Wei Ling, T., & Abdul Wahab, N. S. (2018). Roles of tax planning in market valuation of corporate social responsibility. Cogent Business & Management, 5(1), 1482595.
33. Weld, W. C., Michaely, R., Thaler, R. H., & Benartzi, S. (2009). The nominal share price puzzle. Journal of Economic Perspectives, 23(2), 121-142.
34. Zhu, N., Mbroh, N., Monney, A. & Bonsu, M.O.A. (2019). Corporate tax avoidance and firm performance. European Scientific Research, 15(7), 61- 70.
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