Tax planning and the value of listed commercial banks in Nigeria

Abstract

This study investigated the effect of tax planning on the value of listed Commercial Banks in Nigeria. Effective Tax Rate (ETR), Tax Saving (TSV), and Book Tax Difference (BTDs) were used as proxies for tax planning, while Tobin’s Q was used as a measure of firm value. A sample of thirteen (13) commercial banks was selected based on the availability of the annual reports and accounts from the population of all the sixteen (16) commercial banks quoted on the Nigerian Exchange Group Limited. Data for the study was obtained from the annual reports and accounts of the sampled commercial banks in Nigeria covering a period of ten years from 2012-2021. Multiple regressions were used to test the three formulated research hypotheses and the fixed effect regression result was preferred for interpretation based on the underlying assumptions of the Hausman test. This study found that the ETR impacted negatively and significantly on firm value. However, the study found that TSV impacted positively and significantly on firm value. The study further found that BTD has a positive but not significant impact on firm value. The study therefore, recommended among others that since the influence of effective tax rate is statistically negative and significant on firm value, shareholders should be involved in the effective monitoring of managers so that their intentions of diverting organizations resources for their selfish needs will be reduced. Also, firms should embrace good governance practices so that the information asymmetry between the managers and shareholders will be mitigated to enhance the value of the firm.