Page 86 - CITN 2017 Journal

CORPORATE TAX PLANNING AND

FIRM VALUE OF NON-FINANCIAL

QUOTED COMPANIES IN NIGERIA

By

Lawrencia Olattunde OGUNDIPE
Department of Business Education, Osun State College of Education, Ila-Oragun.
E-mail: o.tunde24@yahoo.com
Mary Kehinde SALAWU
Department of Management and Accounting, Obafemi Awolowo University, Ile-Ife, Nigeria. Email: marysalawu
@yahoo.com, rsalawu@oauife.edu.ng
Oluwatosin Olusola ADESINA
Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria.
Emial: regensoul@yahoo.ca

ABSTRACT

The study examined the impact of corporate tax planning on the firm value of non-financial
quoted companies in Nigeria between 2004 and 2014. A sample of fifty (50) companies out
of 151 non-financial quoted companies that covers 10 sectors were purposively selected.
The rationale for the exclusion of financial related quoted companies like banks, insurance
companies and Mortgage Fund Companies was due to the peculiarity in their operations
which are substantially different from non-financial quoted companies. The data used in
the analysis were collected from the audited financial statement of the selected non-
financial quoted companies in Nigeria and Nigeria Stock Exchange Fact books. Data were
analysed using Generalized Method of Moments (GMM) technique. The result showed
that there is positive and significantly relationship between Effective Tax Rates (ETR) and
firm value (TobinQ). Although, the theoretical expectation is an inverse relationship
between firms' value and effective tax rate; the positive relationship as shown in the result
implies that tax planning activities has not be benefiting the increase in firm value. All the
variables such as leverage (LEV), Liquidity (LIQ), Net Working Capital (NWC), Growth
opportunities (MTB) and capital intensity (CIN) were found to have a positive and
significant relationship with the firm value. The recommendation thus is that firms need to
institute more healthy tax planning practices and engage the services of professional tax
consultants for higher firm value.

Keywords: Tax Planning, Effective Tax Rate, Firm Value, Nigeria
JEL CLASSIFICATION: H25, H26, H32

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