Firm-Level Financial Characteristics, Industry Structure, and Aggressive Tax Planning of Listed Multinational Firms in Nigeria

Abstract

AbstractThis study examines how firm-level financial characteristics and industry structure shapeaggressive tax planning (ATP) among listed multinational firms in Nigeria. Motivated bymounting fiscal pressure and the disproportionate role of multinational enterprises in Nigeria'scorporate tax base, the paper isolates four economic and structural determinants such as firmsize, profitability, financial leverage, and industry type, and estimates their effect on taxaggressiveness. Using a balanced panel of 21 listed multinational firms over the 2015–2024period (210 firm-year observations), aggressive tax planning is proxied by the book–taxdifference (BTD) and modelled through a Random Effects panel regression selected via theHausman specification test. Diagnostic tests confirm the absence of heteroskedasticity andmulticollinearity. The results show that firm size (β = 0.011, p = .003) and profitability (β =1.308, p = .004) exert positive and significant effects on ATP, indicating that larger and moreprofitable multinationals possess both the capacity and the incentive to widen the gap betweenaccounting and taxable income. Industry type is also positive and significant (β = 0.007, p =.005), confirming that capital-intensive sectors present greater structural opportunities for taxminimisation. In contrast, financial leverage carries a significant negative coefficient (β = –0.795, p < .001), consistent with a substitution-and-monitoring interpretation in which debt taxshields and creditor oversight jointly restrain aggressive positioning. The findings supportresource-based, incentive, opportunity, and trade-off theories over the competing political-costperspective, and they carry direct implications for risk-based tax enforcement in Nigeria. Thepaper recommends that the Federal Inland Revenue Service prioritise large, profitable, capitalintensive multinationals in transfer-pricing and profit-shifting audits.