The moderating effect of institutional ownership on board attributes and tax aggressiveness

The study aimed to examine how institutional ownership moderates the relationship between board attributes (such as board independence, board size, and board diversity) and tax aggressiveness in publicly listed companies in Nigeria for a period covering 2014-2023. The study utilized a panel data regression analysis. A sample of 153 publicly listed firms was used, and data on board attributes, institutional ownership, and tax aggressiveness were collected from financial statements, proxy filings, and ownership disclosures. Institutional ownership was treated as a moderating variable in the relationship between board attributes and tax aggressiveness. The study found that institutional ownership significantly moderates the relationship between board independence and tax aggressiveness. Specifically, firms with higher institutional ownership and independent boards exhibited lower tax aggressiveness. However, the moderating effect was insignificant for board size and diversity. Institutional investors' presence can strengthen independent boards' role in curbing tax aggressiveness. However, this effect does not extend to other board attributes such as size and diversity. Policymakers and regulators should consider encouraging institutional ownership as a means to enhance corporate governance and reduce tax aggressiveness. Companies should also prioritize board independence, especially in environments with significant institutional ownership. The study underscores the importance of institutional ownership in corporate governance, particularly in enhancing the effectiveness of independent boards in mitigating aggressive tax strategies. The study's findings are limited to publicly listed companies and may not be generalizable to private firms. Additionally, the study focuses on U.S. firms, and the results may vary in different regulatory environments. This study contributes to the literature by providing empirical evidence on the moderating role of institutional ownership in the relationship between board attributes and tax aggressiveness, a relatively under-explored area in corporate governance research.