IMPAECT OF CORPORATE GOVERNANCE ACCOUNTING MECHANISMS ON TAX AGGRRESSIVENESS OFSELECTED LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA 2012-2022

Abstract

The study examined the impact of corporate governance mechanisms on tax aggressiveness of selected listed industrial goods firms in Nigeria for the period, 2010 – 2023. The specific objectives of the study were to examine the impact of board independence, board size, audit committee and board gender diversity. The study adopted ex-post facto research design which enabled panel data to be extracted from the annual reports and accounts of nine (9) selected listed industrial goods firms listed on the floor of the Nigerian Exchange Group for the period of 14 years, spanning from 2010-2023. The study conducted descriptive statistical test in order to determine the individual characteristics of the model variables. Pearson Correlation Matrix Test was also carried out to ascertain the strength and magnitude of the relationship between corporate governance variables and tax aggressiveness of the sampled firms. Presence of multicollinarity among the explanatory variables was checked using the conventional Variance Inflation Factor (VIF) so as to determine the extent of their correlation. The study made use of general multiple regression analyses anchored on ordinary least square (OLS) pooled panel regression model, fixed effect and random effect regression models to estimate the empirical relationship between components of corporate governance employed in the study and the dependent variable at 0.05 level of significance. Hausman specification test was further carried out in order to determine the most appropriate model between the fixed effect model and random effect model in testing the hypotheses of the study; which favoured random effect regression model. The results of the analysis revealed that board independence and audit committee had negative and significant impact of tax aggressiveness of the selected listed industrial goods firms in Nigeria. Also, the study discovered that board size and board gender diversity had positive and significant impact on tax aggressiveness of the sampled firms. The implication of these findings is that corporate governance practices had significant influence on tax aggressiveness of the sampled industrial goods firms in Nigeria. The study therefore concluded that the independent variables employed as proxies for corporate governance mechanisms are relevant in estimating tax aggressiveness of the sampled firms. The study therefore recommended that there will be a need to rely largely on the role of external auditors who are expected to be neutral in resolving the conflicting interest between the shareholders who want to maximize profit and the government, who want to maximize tax revenue.