Page 98 - CITN 2017 Journal

-16.3657*** -4.66287*** 176.167*** 187.299***
NWC 1(0)
(0.0000) (0.0000) (0.0000) (0.0000)
-6.25657*** -2.41931*** 162.932***
MTB 1(0)
(0.0000) (0.0078) (0.0001)
-4.95656*** -1.33811* 130.129** 148.698***
CIN 1(0)
(0.0000) (0.0904) (0.0231) (0.0011)
***, **, * mean significant at 1%, 5% and 10% respectively. P-Values are in parentesis
Source: Author's Computation, 2015
The table 5 presents the results of GMM used in examines the effects of Corporate Tax
Planning on the value of non-financial quoted companies in Nigeria. Specifically, the
lagged dependent variable TOBINQ is significant and positive. This confirms the
i,t-1
dynamic behavior of value of non-financial quoted companies in Nigeria. It is obvious
that firms have target firm value level that balances the cost and benefits of enhancing
shareholders value. This finding is consistent with the result found by El-Faitouri
(2014).The coefficient of lagged dependent variable (TOBINQ) is positive and
significantly different from zero at 1%. This suggests that current firm value is positively
influenced by firm value in the previous year. The adjustment coefficient is about
0.880044 (1-0.119956), which provides strong evidence that the dynamic model is
realistic, changes in firm-specific characteristics or random shocks cannot be
instantaneously adjusted to in order to move towards the target firm value because of the
adjustment process which is at a cost both transactional cost and other adjustment costs.

The result shows that the regression coefficient for Effective Tax Rates (ETR) is positive
and significantly associated with TobinQ (p<0.01). Although, the theoretical expectation
is an inverse relationship between firms' value and effective tax rate implying a positive
impact between tax planning activities and firms' value, this finding implies that Tax
planning has a negative and significant impact on the value of non-financial quoted
companies in Nigeria. Although this study shows a positive relationship between tax
planning and the value of the company, other studies have found a negative relationship
between tax planning and business value (Khaoula, Ayed and Zemzem; 2014). Similarly,
Lev and Thiagarajan (1993) suggested that stock return is negatively associated with
annual changes in the effective tax rate (ETR). This finding of this study failed to
substantiate the Hoffman's (1961) tax planning theory that recognised a positive
association between firm tax planning activity and firm performance; that is the higher the
tax planning aggressiveness, the lower the effective tax rate and higher the firms' value.
This position was buttressed by earlier researchers such as Desai and Hines (2002) and
Chen, Chen and Chen (2010) that reported that tightening of the tax system is positively
associated with higher market performance of firms.

Table 5: Estimation Results of the Dynamic GMM Model for the Effect of Corporate
Tax Planning on the Value of Non-Financial Quoted Companies in Nigeria

Variables Coefficient Std. Error t-Statistic Prob.
TOBINQ(-1) 0.119956*** 0.008555 14.02241 0.0000
ETR 0.087454*** 0.008888 9.839238 0.0000
LEV 8.008351*** 1.377332 5.814394 0.0000

ROA -25.63380*** 3.838942 -6.677308 0.0000
SIZE -0.381005*** 0.114068 -3.340150 0.0009
LIQ 10.08383*** 2.036899 4.950581 0.0000
NWC 3.259702*** 0.442361 7.368879 0.0000
MTB 0.754743*** 0.015093 50.00762 0.0000
CIN 2.271338* 1.172940 1.936449 0.0535
91