Does Corporate Governance Moderate the Relationship between Tax Aggressiveness and Firm Performance?

Abstract

The objective of the study is to examine the moderating effect of corporate governance on the relationship between corporate tax aggressiveness and firm financial performance. The study made use of the ex-post facto research design. The population and sample consisted of all the 52 companies quoted on the floor of the Nigerian Stock Exchange as financial service providers between 2013 and 2018. Data for the study were analysed using the random effect panel regression technique as indicated by the Hausman test. The study found that tax aggressiveness exhibited a negative relationship with firm performance but this was statistically insignificant when tested at the 5% level of significance. Corporate governance was found to exhibit a positive relationship with firm performance and this was statistically significant when tested at a 5% level of significance. Corporate governance was found not to have a significant moderating effect on the relationship between tax aggressiveness and firm performance when tested at a 5% level of significance. The study recommends that for most organizations to be successful in their tax aggressive strategy there is a need for strict adherence to corporate governance mechanisms to improve financial performance.

Keywords: Tax aggressiveness, Firm financial performance, Corporate governance