Page 91 - CITN 2017 Journal

fixed-effects, random-effects and pooled estimations. The study showed that while
effective tax rate and managerial efficiency are negatively related, effective tax rate and
non-performing loans showed a positive and insignificant relationship. Competition in the
banking industry reduces the cost of financial intermediation and improves delivery of
high quality services thereby enhancing social welfare through creative innovations in
technology and investment. Since competition is a motivation for banks and also promotes
economic growth by access to financing. This study revealed that competition brings about
increase in the level of tax remittance.

The empirical review on the effect of tax planning/avoidance on value of firms shows that
there are mixed results on how these two concepts are related. However, there seem to be
inadequate empirical literature in Nigeria on variables under study. Corporate studies in
Nigeria have been clustered around Banks' competition and tax avoidance activities,
corporate governance and taxation as a whole and tax planning and corporate governance
especially in the financial quoted companies. Further, there is paucity of study that is
available on the Nigerian environment that specifically focuses on how tax planning
affects firm value especially the non-financial quoted firms. It is in a bid to close this
existing gap that this study seeks to examine the impact of corporate tax planning and firm
value and to investigate whether tax planning is affected by the corporate governance
mechanism among the non-financial quoted companies in Nigeria.

Finally, this study was based on the theoretical framework of Agency and Hoffman's Tax
Planning theories. The agency of avoidance theory of tax planning has been viewed two
perspective differences. Firstly, the traditional theory perspective view of the tax planning
is seen as leading to increase after tax earnings and therefore to be in the interest of
shareholders, this is typically taken in valuation model/firm value (Desai & Dharmapala,
2009b; Wahab & Holland, 2012; Desai & Dharmapala, 2006). Tax planning activities that
reduce transfer resources from shareholders to government should generally enhance
shareholders wealth/firm value. Secondly, the agency theory perspective views of the tax
planning suggest that tax planning can be complex and opaque and can possibly allow for
managerial opportunism. Tax planning can lead to a reduction in firm value when
managers have both the opportunity to understate reported accounting profit and the
incentive to reduce corporate income tax liability by understating taxable income or less
transparency (Desai & Dharmapala, 2009b; Wahab & Holland, 2012; Minnick & Noga,
2010; Desai & Dharmapala, 2006).

Hoffman (1961) recognised the role of tax cost in the tax planning activities. Hoffman's
theory thus provided that the positive association between tax planning and corporate
performance is on a basic assumption that tax benefits from the tax planning exceed tax
cost. The scope of the Hoffman's tax planning theory does not address the dynamics of tax
planning and market performance. Owing from the above the theory of tax planning
encourages a taxpayer to look for available tax reduction avenues within the tax laws so as
to reduce his tax obligation. The theory holds that there is nothing wrong if the taxpayer
uses the loopholes of the tax system to his advantage; it only becomes wrong where the
taxpayer evades tax.

3. METHODOLOGY

This study used secondary data for the analysis. The list of quoted companies as released
by Nigerian Stock Exchange online November 2014 was 231 companies sub-divided into
31 Sectors out of which 74 of these 231 were financial related companies, given Non-
Financial Quoted Companies of 151 which serves as population for this study. From this, a

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