Board Diversity and Tax Saving Strategies of Financially Trouble Listed Firms in Nigeria

Abstract

The study examined the relationship between board diversity and tax saving strategies of financially troubled listed firms in Nigeria. Board diversity was proxy using board gender diversity (BGD), board nationality diversity (BND) and board ethnicity diversity (BED) while tax savings was proxy as tax sheltering using effective tax rate (ETR). The ex post facto design was adopted and the data for the study was collected from the annual reports and accounts of the firms listed under industrial goods sector and oil & gas sector of the Nigerian Exchange Group (NGX)for the period of 2015-2022. Panel Least squares regression model was used in the data analysis and the results of the study show a significant and positive association between board gender diversity (BGD), board nationality diversity (BND), board ethnicity diversity (BED) and tax savings of listed financially troubled firms in Nigeria at 1% -5% significant level. The study therefore concludes that board diversity ensures corporate tax savings. The study recommends that firms should increase the number of female directors in the board as high proportion of female directorship presence ensures corporate tax savings so also the number of ethnic group in the board as it ensures ease resuscitation of financially troubled listed firms in Nigeria. A balanced approach towards the hiring of foreign directors was recommended for listed firms in Nigeria. With this development, corporate tax savings would constantly be maintained.