EFFECT OF OWNERSHIP STRUCTURE ON TAX AGGRESSIVENESS OF LISTED FINANCIAL FIRMS IN NIGERIA

Abstract Tax avoidance is a rich source of financial benefit to firms and an inexpensive source of finance; however, aggressive tax behavior has both tangible risks such as legal costs and fines and intangible disadvantages like higher reputational risk and higher risk exposure. This study explored the effect of ownership structure on tax aggressiveness of listed Nigerian financial firms from 2012-2023. Out of 49 listed institutions, 41 were sampled based on the selection criteria. After conducting a series of diagnostic tests, the research utilized a robust random effects regression model to evaluate three proxies of ownership. The research found that greater managerial ownership is associated with a statistically significant increase in the cash effective tax rate, and that suggests that when managers have equity stakes, they may adopt more conservative tax strategies. On the contrary, concentration of ownership and institutional ownership were each negatively but statistically insignificant related with the cash effective tax rate. Based on these findings, the study recommended that financial institutions ensure policies which match managers' and shareholders' interests—such as equity-based remuneration or share ownership plans—to ensure sensible tax behavior. In addition, firms should create and maintain institutional investors through the provision of high levels of transparency, good corporate governance practices, and strong financial performance. Also, frequent communication with institutional stakeholders to learn about their expectations can assist in directing effective ownership and tax planning strategies.