Tax Planning and Firm Performance among Listed Nigerian Deposit Money Banks
This study examines the relationship between Tax Planning and Firm Performance among listed Nigerian Deposit Banks from 2013 to 2022. Tax Planning strategies employed in managing tax obligations can affect a Bank’s profitability and Asset utilization. Tax planning was measured by the effective tax rate (ETR), book-tax difference, and Non-Debt Tax Shield metrics. Firm Performance was determined by its Return on Asset (ROA), and a control variable of Earnings Per Share (EPS) was introduced. The study employs an ex-post-facto research design and the technique of Ordinary Least Square to investigate the relationship between the variables using ten Nigerian Deposit Money Banks listed on the Nigerian Exchange Group as of December 2022. Findings revealed that changes in the effective tax rate and non-debt tax shield do not significantly influence firm performance, while book-tax differences have a significant positive effect on the return on asset measure of firm performance of listed deposit money banks in Nigeria during the period. This implies that an increase in book-tax differences significantly enhances firm performance. The study recommended that corporate governance frameworks in Nigerian banks emphasize the strategic management of book-tax differences to enhance firm performance. Policymakers should also consider providing clearer guidelines on acceptable tax planning practices to ensure that firms can maximize the benefits of these strategies without engaging in overly aggressive practices.
Keywords: Effective tax rate, Book-Tax Difference, Non-Debt Tax Shield, Return on Asset.
Citation: Ologun, O.V., & Gbadebo, M.M. (2024). Tax Planning and Firm Performance among Listed Nigerian Deposit Money Banks. International Journal of Innovative Research in Accounting and Sustainability, 9(4), 27-41.