Effect of firm attributes on tax aggressiveness of quoted oil and gas firms in Nigeria

Abstract

Grounded in the principles of Agency Theory, this study explores the impact of firm attributes on the tax aggressiveness of listed oil and gas companies in Nigeria. It focuses on how profitability and financial leverage influence the level of tax aggressiveness, which is measured using the effective tax rate (ETR). The study population comprises eight oil and gas firms listed on the Nigerian Exchange Group, of which seven were purposively selected based on the availability of complete financial data for the ten-year period between 2015 and 2024. An ex post facto research design was employed, relying on secondary data obtained from the firms’ audited annual reports and financial statements. Data analysis involved descriptive statistics, correlation analysis, and panel regression techniques, with the Hausman specification test determining the most appropriate model. The empirical results indicate that profitability has a negative and statistically significant relationship with ETR, suggesting that highly profitable firms tend to engage in greater tax planning activities to lower their tax obligations. Likewise, financial leverage exhibits a negative and significant effect on ETR, implying that firms with higher debt ratios benefit from interest tax shields that reduce their overall tax liabilities. The study concludes that effective management of profitability and capital structure enhances tax efficiency and supports the Agency Theory proposition that managerial actions should align with shareholders’ wealth maximization. It is recommended that oil and gas firms strengthen ethical and transparent tax strategies that optimize tax benefits while maintaining compliance with regulatory standards to promote financial sustainability and good corporate governance.