Assessing the Effects of Corporate Taxation on the Investment Policy of Manufacturing Firms in Nigeria

Akinleye, Gideon Tayo; Olarewaju, Odunayo Magret; Fajuyagbe, Samson Bamikole

doi:10.2478/foli-2019-0010

Cited by 4 publications

(4 citation statements)

References 9 publications

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“…The finding of this study is consistent with those of [44,45]; and [46]. Empirically, a negative effect on ROA by Corporate Governance dimensions was found from studies in Nigeria using Oil and Gas firms and multinational firms by [44] and [45].…”

Section: Discussionsupporting

confidence: 89%

“…However, a negative effect on ROA by Corporate Governance dimensions was found from studies in Nigeria using Oil and Gas firms and multinational firms by [44] and [45]. Also, [46] found a negative association between board age diversity as Corporate Governance dimensions and firm performance measured by ROA from their study using SMEs in United Kingdom.…”

Section: Galley Proofmentioning

confidence: 92%

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Corporate Governance Mechanisms and Financial Performance of Listed Oil and Gas Firms in Nigeria: An Empirical Assessment

Asikhia,

Fabunmi,

Akinlabi

et al. 2023

AJEBA

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Financial performance indicates how well an Oil and Gas firms have judiciously utilized the available limited resources in all its operations. In spite of this, evidence have shown that the performance of the Oil and Gas firms in Nigeria have been sliding due to poor Corporate Governance. Several researches and debates on whether Corporate Governance dimensions such as board composition, board size, board gender diversity, audit committee have any influence on the performance of the firms have been carried out but these studies appear not to focus on the effect of Corporate Governance dimensions on financial performance of listed Oil and Gas firms. Hence, this study examined the effect of Corporate Governance dimensions on the financial performance of listed Oil and Gas firms in Nigeria for ten years, 2009 to 2018. The study is underpinned by the stakeholder theory. The study adopted a content analytical approach to obtain data through the corporate website of the respective oil and gas firms and website of the Nigerian Stock Exchange. A total of 12 Oil and Gas firms were selected for the study cutting across three listing classifications of the Oil and Gas firms in Nigeria. The result of the study showed that Corporate Governance had no significant effect on return on assets (Adj.R2= 0.009; F = 0.505; p > 0.05). The result suggests that listed Oil and Gas companies in Nigeria should continue to maintain large board size provided the cost of doing so is not outrageous and ensure that the board always has a mix of persons with requisite skills, knowledge and understanding of business management and the operations of the company. The study also suggest that Oil and Gas firms should anchor on Corporate Governance dimensions for higher and better performance.

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Section: Discussionsupporting

confidence: 89%

Section: Galley Proofmentioning

confidence: 92%

Corporate Governance Mechanisms and Financial Performance of Listed Oil and Gas Firms in Nigeria: An Empirical Assessment

Asikhia,

Fabunmi,

Akinlabi

et al. 2023

AJEBA

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“…Several authors have done much empirical work to demonstrate the major debates over how tax revenue generation affects private domestic investment yielded conflicting results. Some support the hypothesis that a rise in the share of tax revenue collection is positively associated with domestic investment; for example, Akinleye et al (2019) argued that corporate income tax contributes more to macroeconomic private domestic investment, Adejare & Akande (2018) and Nkem & Sunday (2019) (Nkem & Sunday, 2019) found significant relationship value added tax and private investment (Njuru et al (2013) found a significant relationship between import duty, excise duty and private domestic investment, a study conducted by Ekpung & Wilfred (2014) performed the analysis which revealed corporate income tax negatively related with investment and Andrejs et al (2019) revealed that value added tax and corporate income tax are negative correlated with private domestic investment.…”

Section: 0mentioning

confidence: 85%

Influence of Value Added Tax Revenue on Private Domestic Investment in Developing Countries

Chindengwike

2022

JGE

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The study's overarching goal is to assess the influence of Value Added Tax (VAT) revenue on private domestic investment in emerging countries. The study used a time series research design, and it is a case study of one country, Tanzania. Annual time series data from 1998 to 2020 were used in the study. The data on tax income (VAT) is taken from the Tanzania Revenue Authority website and the Bank of Tanzania, while the data on private domestic investment as Gross fixed capital formation of the private sector as a percentage of GDP is obtained from the World Bank. Following the first tests for heteroscedasticity, multi-collinearity, unit roots, lag length selection, and co-integrating vectors. The long-run and short-run correlations were then computed. The findings demonstrated that in the long run, value added tax is negatively associated to private domestic investment. The analysis showed a negative association between the degree of investment and the value added tax parameter estimates. Even though value added tax generates government revenue, increasing it encourages tax evasion and leads to high prices of goods, putting the burden on low-income earners, reducing disposable income and distorting saving and private domestic investment. The study recommends that governments reduce VAT rates, simplify their tax regimes, address any tax administrative issues, and plug all gaps for tax evasion in order to increase revenue generation and attract private investments. For example, the government should improve an appropriate tax system and implement progressive tax reforms to attract private investors. As the study's findings demonstrated that value added tax has a negative long-term impact on investment, a greater value added tax levied causes higher corporate costs. Governments must also lower VAT rates, simplify their tax regimes, address any tax administrative issues, and close any gaps for tax evasion in order to increase revenue generation and attract private investment. For example, the government should improve an appropriate tax system and implement progressive tax reforms to attract private investors. As the study's findings demonstrated that value added tax has a negative long-term impact on investment, a greater value added tax levied causes higher corporate costs.

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“…A series of studies have explored the impact of tax policy on investment decisions in the manufacturing industry. Akinleye (2019) and Sankarganesh (2021) both found that higher corporate income taxes are associated with lower investment in manufacturing firms, with Akinleye specifically recommending that the Nigerian government design an appropriate corporate income tax policy to encourage manufacturing investment. Yinka (2013) emphasized the need for tax reforms and more realistic tax rates to minimize distortion and encourage economic growth through investment.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Tax Policy on Investment Decisions: A Case Study in the Manufacturing Industry

Rely

2022

ATESTASI

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This research delves into the intricate relationship between tax policy and investment decisions within the manufacturing industry. Through a comprehensive literature review, the study aims to elucidate the impact of tax incentives on investment behavior, particularly focusing on their effectiveness in stimulating innovation and competitiveness among manufacturing firms. Employing qualitative research methodology, the selection of literature involves identifying and analyzing scholarly articles, books, and reports that provide insights into the research topic. Data collection entails systematic gathering of information from selected sources, while data analysis involves identifying themes, patterns, and relationships within the literature. The findings underscore the pivotal role of tax incentives, such as investment tax credits, accelerated depreciation, and research and development (R&D) deductions, in shaping investment decisions within the manufacturing sector. Moreover, the differential effects of tax policy reforms on firms of different sizes, the influence of global dynamics including international tax competition and trade liberalization, and the implications for future research are discussed. The study contributes to a deeper understanding of the mechanisms through which tax policy influences investment decisions, offering insights for policymakers and businesses to navigate the complexities of the global economy more effectively.

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Assessing the Effects of Corporate Taxation on the Investment Policy of Manufacturing Firms in Nigeria

Cited by 4 publications

References 9 publications

Corporate Governance Mechanisms and Financial Performance of Listed Oil and Gas Firms in Nigeria: An Empirical Assessment

Corporate Governance Mechanisms and Financial Performance of Listed Oil and Gas Firms in Nigeria: An Empirical Assessment

Influence of Value Added Tax Revenue on Private Domestic Investment in Developing Countries

The Impact of Tax Policy on Investment Decisions: A Case Study in the Manufacturing Industry

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