Effect of Firm Attributes on Tax Practices of Listed Conglomerate Firms in Nigeria

The case of this paper is the effect of firm attributes on taxation behavior of listed conglomerate firms in Nigeria over a period of seven years between 2015 and 2021. The studied firm attribute is based on profitability, leverage and size of the firm. The research design of the paper was ex- post facto to study the complicated role of firm attributes in relation to tax practices of the listed conglomerate firms in Nigeria. Panel Data Estimated Generalized Least Square was used to draw empirical knowledge in the study. Interesting patterns are reflected by result findings: profitability is shown to have a statistically significant and negative effect on effective tax rates, based on which, the higher the level of profitability, the lower the effective tax rates. This highlights the importance of tax efficient practices to increase after tax profits. There is a negative and statistically significant impact of leverage on the effective tax rates which agrees with the application of leverage as a tax shield strategy by large conglomerates firms in avoiding taxes. There is a statistically significant negative relationship between firm size and effective tax rates, which means that bigger conglomerate firms are in a better position to enjoy tax incentives and tax deductions as well as advanced tax avoidance schemes. The research study has added value to the knowledge base with regard to the complexity of the taxation system in the Nigerian conglomerate companies and highlighting on the importance of firm characteristics in the scenario. It indicates that strong tax management and optimization is one of the crucial elements of the financial performance of conglomerate firms. The implications of this paper to policymakers, tax practitioners and stakeholders are that, there is need to apply equitable taxation policy laws that take into consideration the diversity of conglomerate firms in Nigeria. The study recommends the need to extend the given empirical research on emerging markets in order to give meaningful findings to the field and the industry.