Effect of Tax Aggressiveness On Financial Performance of Listed Consumer Goods Firms in Nigeria

• Post by: birpo
• June 25, 2026
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Matthew Ada Uzunma¹ & Eneh, Sylvia Nnenna, Ph.D., TRCN, ACA²*

Abstract         

This study investigated the effect of tax aggressiveness on the financial performance of listed consumer goods firms in Nigeria between 2014 and 2025, with Return on Assets (ROA) serving as the measure of financial performance. The specific objective was to examine how Effective Tax Rate (ETR), Cash Effective Tax Rate (CETR), Book-Tax Difference (BTD), Deferred Tax Ratio (DTR), and Tax Planning Intensity Index (TPII) influence ROA. Using panel data obtained from five listed consumer goods firms and employing panel least squares regression analysis, the study found that two of the five variables had statistically significant effects on ROA. Book-Tax Difference (β = 0.008511, p = 0.0001) exhibited a significant positive effect, indicating that higher differences between accounting income and taxable income are associated with improved profitability. In contrast, Deferred Tax Ratio (β = -3.149117, p = 0.0000) showed a significant negative effect, suggesting that higher deferred tax obligations reduce financial performance. On the other hand, Effective Tax Rate (β = -0.259426, p = 0.8095), Cash Effective Tax Rate (β = 0.381921, p = 0.7134), and Tax Planning Intensity Index (β = -0.188553, p = 0.7866) all showed statistically insignificant relationships with ROA, indicating that these tax measures do not have a meaningful direct impact on profitability within the sampled firms. Descriptive statistics revealed moderate variation in tax aggressiveness indicators and profitability across the firms, reflecting differences in tax behavior and financial performance over time. The findings suggest that tax aggressiveness does not uniformly influence financial performance, but specific components such as book-tax differences and deferred tax positions play a more critical role. It is concluded that while tax aggressiveness is an important aspect of corporate financial behavior, firms should focus more on managing deferred tax obligations and strategically leveraging book-tax differences to enhance profitability, rather than relying solely on effective tax rate reductions or tax planning intensity.

Keywords: Tax Aggressiveness, Financial Performance, Effective Tax Rate, Book-Tax Difference, Deferred Tax RatioCite: Matthew, A. U. & Eneh, S. N. (2026). Effect of Tax Aggressiveness On Financial Performance of Listed Consumer Goods Firms in Nigeria. International Journal of Management Foresight and Strategy,4(5), 346-371. https://doi.org/10.5281/zenodo.20788878