Tax Planning Strategies and Earnings Management Among Listed Conglomerates in Nigeria

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Authors: Abdulraheem Olayiwola Kadir

Abstract

Earnings management remains a persistent challenge for corporate governance, particularly in Nigeria, where managerial discretion over reported earnings persists due to numerous issues among which are corporate tax-related decisions. Thus, this study investigates the effect of tax planning strategies on earnings management among listed conglomerates in Nigeria. A longitudinal research design was adopted, using secondary data drawn from audited financial statements of five (5) conglomerates listed on the Nigerian Exchange Group (NGX) between 2019 and 2024. The study employed a census sampling technique to ensure that only firms with complete financial disclosures were included. Data were analysed using panel regression analysis and the findings at 5% significance level indicate that thin capitalisation (β=0.312, p-value = 0.002) and capital intensity (β=0.227, p-value = 0.014) create avenues for earnings manipulation through leverage and depreciation discretion; CETR (β=0.284, p-value = 0.010) and DTAL (β=0.196, p-value = 0.025) reflect aggressive tax planning practices that may facilitate income smoothing and tax avoidance. The study concludes that tax planning strategies significantly influence earnings management behaviour among Nigerian conglomerates, highlighting the interplay between corporate financial discretion and regulatory gaps. It is recommended that regulatory authorities should strengthen oversight mechanisms by imposing more robust disclosure requirements on tax positions and uncertain tax treatments.

Keywords: thin capitalization, capital intensity, cash-effective tax rate, deferred tax

7. 2025 - NIJAF - 17 - 207 Abdulraheem.pdf

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