Corporate Governance Attributes and Tax Planning of Listed Pharmaceutical Companies in Nigeria

Abstract

Corporate governance is a means in which businesses are fairly, efficiently, effectively and transparently managed in order to achieve corporate goals through better practices and structures. This study investigates the effects of corporate governance characteristics on tax planning of listed pharmaceutical firms in Nigeria from 2015 to 2020. The study used ex post facto correlational research design and a population of eleven (11) pharmaceutical firms made up the population of the study. The data was collected from the published financial statements of the sampled firms as at 31 December, 2020. The secondary data from the annual reports were analysed using univariate, bivariate and multivariate analysis. The multiple regression results disclosed that board size and board financial expertise positively and insignificantly impact tax savings; board compensation and board meetings negatively and insignificantly affects tax savings while gender diversity negatively and insignificantly influences tax savings. Board financial expertise positively and significantly influences book-tax difference while board size, gender diversity, board compensation and board meetings negatively and insignificantly impact book tax difference. The study concluded that corporate governance characteristics influences tax planning of listed firms in Nigeria and hence recommended amongst others that shareholders must preserve a structure to guarantee that the board is given financial incentives for effective tax planning that will assist to solve the agency problem where management exploits shareholders through tax planning practices.