Effect of tax avoidance on accounting conservatsim of listed non-financial firms in Nigeria

Abstract

The study seeks to ascertain the effect of tax avoidance on accounting conservatism of listed non-financial firms in Nigeria. The independent variable, tax avoidance was proxied by Generally Accepted Accounting Principle Effective Tax Rate (GETR), Cash Effective Tax Rate (CETR) and Book Tax Difference (BTD), while the dependent variable accounting conservatism was measured using Negative Accruals (NA). The control variables utilized were leverage, Return on Asset (ROA) and Firm Size (FS). The study covered a period of seven years (2014-2020) and a population of forty-eight listed non-financial firms on the Nigerian stock exchange. The data was analysed using panel regression technique. From the findings, it was discovered that GETR and BTD significantly affect unconditional conservatism with a negative relationship between the variables. Overall, this paper shows that taxation is a determinant of financial reporting conservatism in Nigeria.