Abstract
The study investigated the effect of ownership structure on tax planning of quoted non-financial companies in Nigeria. It aims to find out the ownership structure that improves tax planning thereby reducing tax liability of the firms. Data for the study were extracted from the annual reports and accounts of the companies for ten years (2008 - 2017). The data collected were analysed using descriptive statistics and multiple regressions. The study reveals that managerial and institutional ownerships have no significant positive effect on tax planning, while foreign ownership demonstrates no significant negative effect. Profitability measured using return on assets has a significant positive effect on tax planning of the sampled companies, and leverage shows a no significant negative effect. The findings imply that management-owned companies have fewer incentives to reduce tax, and there is a relationship in the attitude of management and institutional investors towards tax planning of the selected companies. In order to reduce the level of principal-agent conflicts, and to enhance tax planning and monitoring of management activities, the listed non-financial companies in Nigeria should encourage managerial shareholding. Key words: Tax planning, managerial shareholding, institutional shareholding, foreign shareholding, tax expenses.
Highlights
Tax is a significant expense/liability to firms and their owners, decreases cash flow available as profit
Ownership structure refers to the stockholding by shareholders and directors, including shares held by directors/managers, institutional shareholding, shares held by foreigners, concentrated shareholding, government ownership and family ownership
The results show that managerial ownership and institutional ownership have no significant effect on effective tax rate (ETR), which contradicts the results of Beryl (2014) in relation to institutional ownership
Summary
Tax is a significant expense/liability to firms and their owners, decreases cash flow available as profit. Tax planning is seen as the best way which does not breach legal guidelines in reducing tax liability This can be achieved by taking advantage of different tax rates in some places and economic activities, in addition to tax incentives provided under tax regulations (Fallan et al, 1995).. Jensen and Meckling (1976) document that ownership structure as a CG variable is viewed as an agency conflict due to the income tax liability, whilst the other is to fulfill financial planning with minimal tax results. These goals are achieved through three broad ways. The second involves shifting the timing of a taxable event, and the third relates to shifting income to another taxpayer in the same category whose jurisdiction has lower tax rate
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