Effects of Corporate Governance on Corporate Tax Avoidance of Selected Deposit Money Banks in Nigeria

Ezekiel Aremu Adewole, Prof. James. S. Kehinde and Dr. ADEBAYO M. Adeniyi
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Ezekiel Aremu Adewole: Department of Accounting, Lagos State University, (LASU) Ojo, Lagos
Prof. James. S. Kehinde: Department of Accounting, Lagos State University, (LASU) Ojo, Lagos
Dr. ADEBAYO M. Adeniyi: Department of Accounting, Lagos State University, (LASU) Ojo, Lagos

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 8, 3329-3339

Abstract: Global corporate tax avoidance (CTA) has been a major source of worry among researchers, professionals, and other stakeholders. Despite constant tax law reforms, the Government revenue from tax has consistently not measured up to expected income. Any legal strategy employed by a taxpayer to reduce the amount of income tax is known as corporate tax avoidance, however, its cumulative effects had significantly and negatively impacted the allocation of public goods, budget execution, and security quality. This study essentially examined the roles the corporate governance attributes (Credit Risk Committee, CEO duality, Board Independence and Board Audit Committee Independence) play in downward or upward trend of tax avoidance. Data were purposively obtained from annual reports and accounts of the quoted Deposit Money banks (DMB). Descriptive and inferential statistics were employed in the study to analyze the data. The hypotheses were tested using Panel regression analysis technique. The study found that corporate governance components (Credit Risk Committee, CEO duality, Board Independence and Board Audit Committee Independence) have significant influence on the Effective Tax Rate (ETR) of selected deposit money banks in Nigeria. Thus, the study rejected the null hypothesis which state that corporate governance measures do not significantly affect effective tax rate (ETR) of selected deposit money banks in Nigeria. Hence, companies should encourage growth of strong and robust board governance to discourage managers from pursuing aggressive tax planning that may ultimately jeopardize reputation and long-term stability of the firm.

Date: 2024
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