Title:
BOARD STRUCTURE AND CORPORATE TAX AGGRESSIVENESS IN LISTED NIGERIAN FIRMS

Authors:
OGBODO, Okenwa Cyprian, ABUSOMWAN, Rachael Eloho, Nigeria

Abstract:

The focus of the study is to examine board structure and corporate tax aggressiveness in listed Nigerian firms. Specifically, Board size (BDS), board independence (BDIND) and board ownership (BDOWN) are examined as indicators of board structure.  This study utilized the more robust longitudinal data design which was seen as a combination of both cross-sectional and time-series design properties.  A sample of 80 firms was then used for the analysis. In this study, secondary data, by way of annual reports and accounts of the sampled companies in Nigeria and some relevant NSE fact books were used to collect data for 2010-2019. The effect of board structure on tax aggressiveness was analyzed using panel regression. The estimation results reveal that BDIND, BDS and BDOWN all have a negative coefficient and significant at 5% suggesting that an increase these board structure variables results in a reduction in the tax paid/ pre-tax income ratio and this implies an increase in tax aggressive practices. The study concludes that so long as the expected marginal benefit exceeds marginal cost and consequently, tax aggressive strategies could be allowable by corporate boards. Based on the findings of the study, the study recommends that increasing the number of independent directors is not sufficient to curtail tax aggressiveness. This may be so especially when aggressive tax strategies represent a firm's value maximizing activity as it entails a wealth transfer from the government to shareholders of a firm. The study recommends that boards must come to see tax planning activities as unethical even in cases where they may not be illegal.