CORPORATE TAX AGGRESSIVENESS AND VALUE OF LISTED MANUFACTURING COMPANIES IN NIGERIA: THE MODERATING EFFECT OF AUDIT QUALITY

Abstract

The increasing drive for improved revenue generation via diversification of revenue sources by the government ofNigeria particularly through indirect taxes puts corporations at the center stage. This is due to different types of taxes paid by corporations to the government which consequently constitute economic burden on the firms as well as questioning their continued ability to create value for the shareholders. This development leaves corporations with no option than to be tax aggressive through exploitation of the loopholes in the tax laws. This study therefore examined the effect of corporate tax aggressiveness on the value of listed industrial goods firms for a period of 10 years (2009-2018). Both Long-Run Cash Effective Tax Rate (LRCETR) and Book-Tax Difference (BTD) were used as surrogates for tax aggressiveness while, market value of equity (MVE) was used to measure value. Correlational research design was employed while the quantitative data from the annual reports and accounts of the firms were analyzed using fixed effect regression. The results from the study revealed that a reduction in the proportion of the firms’ income paid as tax as well as increase in the book-tax gap, significantly improve the value of the firms. Also, it was found that an increase in the size of leverage significantly reduced the value of the studied firms. It is recommended among others that the firms should continue to increase the book-tax gap through, transfer payment, tax credit and investment in R&D to continue to significantly improve value.