TAX PLANNING AND FINANCIAL PERFORMANCE OF CONGLOMERATE FIRMS IN NIGERIA
Abstract
This study investigates the effect of tax planning on the financial performance of conglomerate firms in Nigeria, focusing on three key dimensions: effective tax rate, tunneling incentives, and bonus mechanisms. Employing panel data analysis, the research provides empirical insights into how these variables influence financial outcomes within complex corporate structures. Findings reveal that effective tax rate has a significant positive impact on financial performance, suggesting that strategic and transparent tax planning enhances profitability. Conversely, tunneling incentives exhibit an insignificant negative relationship with financial performance, implying potential but unproven risks to firm value due to intra-group asset transfers or related-party transactions. Similarly, bonus mechanisms show an insignificant positive effect, indicating that poorly structured or loosely monitored incentive schemes may not drive desired financial outcomes. The study concludes that while tax planning is critical to financial performance, its effectiveness depends on robust governance, internal control, and performance-linked incentives. It recommends that conglomerate firms adopt more transparent tax strategies, strengthen oversight on tunneling behaviors, and redesign compensation systems to better align with financial goals. These measures can collectively improve firm performance and support long-term growth.
Full-Text Access Notice
In accordance with the NERD Policy on promoting peer-reviewed publication, public access to the full text of a project, thesis or dissertation is restricted for three years, allowing the author and supervisors sufficient time to pursue peer-reviewed publication.
During this period, researchers with legitimate academic or research purposes may request authorisation directly from the author to enable NERD to release the indexed full texts of the work using the form below.