External Determinants of Tax Aggressiveness of Listed Non-Financial Companies in Nigeria

Abstract

Research aim: Past studies have shown that managers tend to exhibit opportunistic
tendencies which do not align with the shareholders’ interest. According to the agency
theory, conflicts arise when a company’s manager (the agent) and stockholders (the
principal) have different objectives. The firm’s management and the revenue authority had
different objectives when it came to using a company’s financial report, which resulted in
information asymmetry.
Design/ Methodology/ Approach: The research adopted a longitudinal design and
purposefully sampled 63 companies out of a total population of 112. Secondary data was
obtained from the selected companies’ annual reports spanning from 2015 to 2024, and
analysed using regression techniques.
Research finding: The findings revealed that institutional ownership, foreign ownership,
ownership concentration, audit firm size, and leverage significantly influence tax
aggressiveness, whereas board financial expertise exerts no significant impact on the tax
aggressiveness of Nigerian publicly listed non-financial companies.
Theoretical contribution/Originality: This study contributes to the literature by filling a
gap in sector-specific analyses of external determinants of tax aggressiveness within the
Nigerian context. Grounded in agency theory, it extends prior research by disaggregating
findings across industry sectors and demonstrating how external controls shape corporate
tax behaviour.
Practitioner/Policy implication: The findings suggest that policymakers should enhance
regulatory oversight on institutional and foreign investors’ influence in corporate
governance, promote the engagement of high-quality audit firms, and encourage debt
monitoring mechanisms to reduce aggressive tax behaviour. Companies should also
consider increasing the presence of financially literate board members to balance strategic
tax planning with compliance.
Research limitation: The research focuses on publicly listed non-financial companies
in Nigeria and spans the years 2015 to 2024. The exclusion of financial institutions and
the reliance solely on secondary data may affect the generalizability of the results.
Future studies could incorporate qualitative methods or expand to include cross-country
comparisons and unlisted firms.