Deferred Tax Accounting and its Implications for Firm Performance and Capital Structure in the Oil and Gas Industry in Nigeria

Busuyi Emmanuel Omodara, Vincent Olawale Bamidele and Olusola Success Adeyemi
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Busuyi Emmanuel Omodara: Department of Accounting and Finance, Ajayi Crowther University, Oyo, Nigeria
Vincent Olawale Bamidele: Department of Accounting, Federal College of Education (Technical), Gusau, Zamfara State, Nigeria.
Olusola Success Adeyemi: Department of Accounting, Ekiti State University, Ado-Ekiti, Ekiti State, Nigeria.

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Abstract: This study investigates the implications of deferred tax accounting for firm performance and capital structure in the Nigerian oil and gas industry. Deferred tax arises from temporary differences between accounting and taxable income, as regulated by IAS 12 and the Petroleum Industry Act. Despite its theoretical importance, empirical evidence on the direct impact of deferred tax assets and liabilities on financial outcomes in this sector remains limited. Using an ex post facto research design, the study analyzes panel data from 2010 to 2024 for six oil and gas firms listed on the Nigerian Exchange Group. Descriptive statistics, correlation analysis, and panel regression models were employed, with return on assets (ROA) and debt-to-equity ratio (DER) serving as proxies for firm performance and capital structure, respectively. The results reveal that the deferred tax liability ratio (DTLR) has a negative and significant effect on ROA, indicating that higher deferred tax liabilities are associated with lower firm performance. Conversely, the deferred tax asset ratio (DTAR) exerts a positive and significant effect on ROA, suggesting that higher deferred tax assets enhance profitability. For capital structure, DTLR is positively and significantly related to DER, while DTAR is negatively associated with DER, implying that deferred tax liabilities increase leverage, whereas deferred tax assets reduce it. Firm age and size also significantly influence both performance and capital structure. The findings underscore the strategic importance of deferred tax accounting in financial management and highlight the need for transparent and prudent tax planning in the oil and gas sector. The study offers practical insights for managers, investors, and policymakers seeking to optimize tax strategies and regulatory compliance.

Date: 2026-03-20
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Published in International Journal of Research and Innovation in Social Science, 2026, 10 (2), pp.7727-7742. ⟨10.47772/IJRISS.2026.10200553⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05675405

DOI: 10.47772/IJRISS.2026.10200553

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