A TAX AGGRESSIVENESS AND VALUE OF LISTED CONSUMER GOODS COMPANIES IN NIGERIA

Abstract

This study assesses the impact of tax aggressiveness on firm value of listed consumer goods companies in Nigeria from 2012- 2021. A sample of twelve (12) companies listed as consumer goods was drawn from the population of twenty-one companies. Audited annual reports and accounts were used for data extraction. The analysis was done using descriptive statistics and multiple regressions. Variables used include the tax aggressiveness proxy by tax debt shield (TDS), effective tax rate (ETR), income tax rate (ITR) and measured firm value by Tobin’s Q as the dependent variable. The results of the study found that tax debt shield has a negative and insignificance impact on Tobin’s q and this implies that firms in the consumer goods sector that tax debt shield may have higher levels of financial risk or may face other factors that constrain their growth, profitability and value. Whereby effective tax rate has a negative and significant impact on Tobin’s q and this implies that firms in the consumer goods companies during the study period were unable to effectively manage its tax liabilities and this could be as a result of failure to take good advantage of available tax incentives and decreases value. Lastly and income tax rate has a positive and significant impact on Tobin’s q this indicates more stable and the stability can boost investor’s confidence, leading to a higher demand for shares and consequently driving up the firm’s value. The study therefore, recommends that to improve firm value, the management of listed consumer goods companies should lobby the government to implement tax incentives such as tax breaks, tax credits and other incentives to encourage businesses to invest in the country and lower the corporate tax rate which will make it easier for companies to do businesses, thus, boosting economic growth. Research of this nature should also consider other sectors such as deposit money banks, insurance companies, industrial goods companies and conglomerate companies as this study limited itself to the consumer good companies only