CORPORATE TAX SAVING STRATEGY AND THE VALUE OF LISTED NON FINANCIAL FIRMS IN NIGERIA

ABSTRACT

The broad objective of this study was to investigate the moderating effect of audit committee size on the relationship between corporate tax saving strategy and firm value of listed non- financial firms in Nigeria using a time frame of ten years (2011 – 2020). To achieve at objective, the study specifically ascertained the extent to which audit committee size moderated the relationship among cash effective tax saving strategy, income effective tax saving strategy, non-debt tax saving strategy, debt tax saving strategy and firm value proxies for price to earnings ratio and Tobin Q. In this study, we employed ex-post facto research and descriptive research designs on a panel data set which was sourced from audited annual financial reports of seventy-three (73) listed non-financial firms in Nigeria. In this study, four econometric models were specified, and the study’s hypotheses were tested using both Moderated Regression Analyses technique (MRA) and hierarchical regression analyses technique. Specifically, the probability values, (p- values) from the regression outcomes formed the basis for the decision on the statistical significance of the coefficients obtained for each tested hypothesis. However, the result showed that audit committee size had a significant moderating effect on the relationship between tax saving strategy and firm value. Further investigation reveals mixed outcome which suggest a positive significant relationship between debt tax saving strategy and firm value proxy of Tobin Q but produces a significant negative relationship with firm value proxy of price to earnings during the period under investigation. Further, we find that income effective tax saving strategy show no significant relationship with both firm value proxies of price to earnings and Tobin Q. In line with the findings obtained, we recommend among others a simultaneous policy action in the quest for higher firm value for listed non-financial companies in Nigeria. This imply that employing non-debt tax saving strategy as a tool for improved value, (with respect to Tobin Q) should be complimented with a deliberate increase in the size of its audit committee. The application of such vital policies has been empirically verified hence we believe it will go a long way to reduce agency rift and enhance firm value of non-financial companies in Nigeria.