Tax Planning and Stock Valuation: Evidence from Quoted Industrial Goods Manufacturing Firms from Nigeria

This study analyzed the tax strategies and stock prices of publicly traded Nigerian companies that produce industrial goods from 2015 to 2024. Companies that produce industrial goods and are publicly traded were the sources of the cross-sectional data. A model was developed to determine the relationship between stock value and several tax factors, including effective tax rate, debt tax planning, income tax planning, and non-debt tax planning. At the 5% level of significance, the fixed effects model was utilized as the estimating technique in panel data methodology. Various models were examined, including those with fixed effects, random effects, and pooling estimates. The best fit was determined using the Hausman test. According to the results of the fixed effect estimation, tax planning accounted for 32.3% of the variance in stock value among the listed industrial goods manufacturing companies. The constant beta coefficient is negative at 46.39003 and has a p-value of 0.0321. This means that, with all other variables held constant, the stock value of the quoted industrial goods manufacturing firms will vary positively by up to 46.3 units, and this variation is statistically significant. Moreover, income effect tax planning has a positive coefficient of 0.145266 and a p-value of 0.2586, suggesting that it does not significantly affect the stock value of the stated industrial products manufacturing enterprises. Debt tax planning does not significantly affect the stock value of the quoted industrial products manufacturing enterprises, as indicated by the positive coefficient value of 2.295073 and p-value of 0.0940. Not only does non-debt tax planning have a negative coefficient of -0.000346 and a p-value of 0.9990, but the effective tax rate also has a negative coefficient of -0.984548 and a p-value of 0.0002, suggesting that it has a significant negative effect on the stock value of the quoted industrial goods manufacturing firms. Tax planning affects a company's stock value for the time period studied, according to the study. It suggests that managers should plan their income taxes, but they should double-check that their plans are lawful and that they saved money for the firm so that they wouldn't have to pay too much or too little in taxes, which would improve their financial performance.