Tax Planning and Firm Value


  • Monday Olalade Izevbekhai
  • Abure Ozeigbe Odion


Tax, Tax Planning, Firm Value, Effective Tax Rate, Tax Savings, Share Price, Tobin Q


The paper examines the relationship between tax planning and firm value. In this study, attempt was made to understand how tax payers take advantage of loopholes in tax law with a view to enhancing the value of their firms. The study utilizes a sample of eighty-seven (87) firms from the population of companies quoted on the Nigerian Stock Exchange. The research data was a combination of time series and cross-sectional covering the period 2010 to 2016 with a six hundred and time mine (609) firm-year observation. The study utilizes panel regression technique in estimating the balanced panel data. The usual battery of regression assumption tests were effected to ensure the accuracy of the regression model. The explanatory variables of tax planning were measured by effective tax rate and tax saving while firm value was measured by Tobin Q. A negative relationship was observed between effective tax rate and firm value, while the variable of tax saving revealed both positive and negative relationship with firm value. The control variables of firm size and capital intensity revealed a mixed result, while leverage reported a negative result. The moderating variables of institutional ownership also revealed inconsistent result. The study recommends among others that, shareholders should be involved in the effective monitoring of mangers so that their intentions of diverting organizations resources for their selfish needs will be reduced, also firms should embrace good governance practices so that the information asymmetry between the managers and shareholders will be mitigated in order to enhance the value of the firm.




How to Cite

Izevbekhai, M. O., & Odion, A. O. (2018). Tax Planning and Firm Value. Nigerian Academy of Management Journal, 13(1), 94–119. Retrieved from