Tax Variances and Financial Performance of Deposit Money Banks Multinational Companies in Nigeria

Abstract

The study examined the effect of tax variance and financial performance of deposit money banks multinational companies in Nigeria. It specifically examined the effect of book tax difference on return of asset of deposit money banks, it also examined the effect of effective tax rate on return of asset of deposit money banks in Nigeria .Ex-post facto research design was employed through secondary data to establish the relationship between dependent variable (Return on Asset) and independent variables (Book tax differences and effective tax rate) The population of this study covers all the 14 deposit money banks listed on the Nigeria Exchange Group as at 31 st December, 2020. The study used census sampling to cover all the 14 deposit money banks. Data on all the explained and explanatory variables were extracted from the published financial statements of the 14 deposit money banks for the period of 2006-2020 with 90 observations. Data were analyzed using Panel data which consist on correlation, multiple regression were used to analyze the data. The study found that book tax difference has positive and significant effect on return on asset of deposit money banks while effective tax rate was negative and insignificant on return of asset of listed deposit money banks. Consequent on the findings, the study concluded that tax variance has significant effect on financial performance of listed deposit money banks in Nigeria. The study recommends amongst others that policy makers, accounting standards developers and industry regulators can utilize the study findings to develop an insight on industry effect of book tax difference for ease of bankruptcy prediction from financing cash flow deficiency.