The Effect Of Corporate Tax Avoidance On Shareholder Wealth In Nigerian Firms
Ojeh Augustine, Ph.D., FCA
Department of Accountancy, Faculty of Management Sciences, University of Science and Technology ESUT, Enugu State, Nigeria.
Ngwa Christian Ugonna Ph.D
Department of Accountancy, Faculty of Management Sciences, University of Science and Technology ESUT, Enugu State, Nigeria.
Amaechi Marcellus Chukwu Ph.D.
Department of Marketing, Faculty of Business Administration, University of Nigeria, Enugu Campus.
Abstract
This study examined the effect of corporate tax avoidance on shareholder wealth in Nigerian firms, with a particular focus on its relationship with corporate reputation, long-term sustainability, and the moderating role of corporate governance. A survey method was employed, with data collected from 267 respondents across various business sectors. The findings reveal that the majority of respondents (44.9%) believe corporate tax avoidance positively impacts shareholder wealth, though 30% of respondents expressed concerns that it could have a negative effect. Additionally, tax avoidance was found to have mixed perceptions regarding its impact on long-term sustainability, with 39.3% of respondents indicating it harms sustainability, while others viewed it as either having no effect or contributing positively. When it comes to corporate reputation, 44.9% of respondents felt that tax avoidance significantly damages a firm's image, highlighting concerns over the long-term effects on public perception. Furthermore, the study reveals that corporate governance plays a crucial role in mitigating the negative impacts of tax avoidance, with the majority of respondents (74.9%) recognizing the importance of governance in managing tax avoidance practices ethically. In conclusion, the study suggests that while tax avoidance may provide short-term financial gains, its potential long-term consequences on corporate reputation and sustainability require careful management, with strong corporate governance being key to mitigating associated risks.