CORPORATE GOVERNANCE MECHANISMS AND TAX AVOIDANCE STRATEGIES: EVIDENCE FROM NIGERIAN MULTINATIONAL CORPORATIONS

Abstract

This study explores the relationship between corporate governance mechanisms and tax avoidance strategies among Nigerian multinational corporations. A survey involving 109 respondents was conducted to assess the effectiveness of these mechanisms in mitigating tax avoidance, identify prevalent tax avoidance strategies, and evaluate the impact of recent corporate governance reforms on tax compliance and transparency.The findings indicate that a majority of respondents view corporate governance mechanisms as effective, with 45.9% rating them as effective and 13.8% as very effective. However, opinions are varied, with 18.3% remaining neutral and a portion expressing dissatisfaction. The survey reveals that the most commonly employed tax avoidance strategies are transfer pricing adjustments (32.1%) and profit shifting to low-tax jurisdictions (27.5%). Other strategies, such as the use of tax havens and exploiting tax credits, are less frequently utilized. Recent corporate governance reforms have generally led to improvements in tax compliance and transparency, with 41.3% of respondents observing increased transparency and 36.7% noting improved compliance. Despite these positive trends, there are notable variations in experiences, with some respondents reporting no change or even a decrease in these areas. The study underscores the need for enhanced corporate governance training, strengthened internal controls, and periodic evaluation of governance reforms to address the diverse challenges faced by organizations and achieve more consistent improvements in tax compliance and financial transparency