Corporate Governance Mechanisms and Tax Sheltering; Evidence from Quoted Tax Aggressive Firms in Nigeria

This study empirically examined the relationship between corporate governance mechanisms and tax sheltering of publicly traded tax aggressive companies in Nigeria. To determine the relationship between corporate governance mechanisms and tax sheltering, corporate governance mechanisms were measured with CEO share ownership, directors' remuneration, board independence and board diligence, while tax sheltering was proxy using effective tax rate. The hypotheses formulated to guide the study and the statistical testing of the parameter estimates were worked out using the OLS regression model using STATA V.15. The ex post facto design was adopted and the data for the study was sourced from the published annual financial reports of all tax aggressive companies classified under ICT Sector, Health Care Sector and Oil & Gas Sector of the Nigerian Exchange Limited (NGL) covering from 2013-2021. The results indicate that corporate governance mechanisms having significant and positive association with tax sheltering of listed tax aggressive companies in the country. The study concludes that corporate governance mechanisms ensure tax sheltering for tax aggressive companies. The study however suggests that firms’ board should consider the percentage and proportion of CEO’s share ownership concentration, pay higher remuneration to the board members, increasing the number of independent directors in their board and also consider in composition of the board of directors, their level of expertness, expertise, intelligence and proficiency as these led to tax sheltering among the quoted firms in Nigeria.