Corporate Tax Planning and Shareholder Value Creation in Listed Nigerian Companies

This study examines the relationship between corporate tax planning strategies and shareholder value creation in listed companies on the Nigerian Exchange Group. Tax planning, defined as the use of legally permissible tax minimization strategies, is a key determinant of after-tax profitability and, by extension, shareholder returns. In Nigeria's high-tax environment, characterized by company income tax, education tax, and various sector-specific levies, effective tax planning can generate meaningful financial advantages for firms and their investors. This study uses an ex-post facto design, drawing on annual report data from 18 listed companies across banking, manufacturing, and consumer goods sectors for the period 2019 to 2023. Tax planning is proxied by the effective tax rate and book-tax difference, while shareholder value is measured through earnings per share, Tobin's Q, and total shareholder return. Panel data regression with fixed effects estimation is employed. Results indicate that lower effective tax rates, indicative of active tax planning, are associated with higher earnings per share and improved Tobin's Q values. However, aggressive tax planning beyond a threshold is associated with negative market perception effects. The study concludes that moderate and transparent tax planning enhances shareholder value in Nigerian listed companies. It recommends that corporate boards adopt formal tax governance frameworks that balance value creation objectives with regulatory compliance and reputational risk management.

Keywords: tax planning, shareholder value, effective tax rate, Nigerian Exchange Group, corporate tax.