Attributes Of Company Taxation And Financial Performance Of Listed Consumer Goods Companies In Nigeria
Enekwe Chinedu Innocent Ph.D
Department of Accountancy, Faculty of Management and Social Sciences. Caritas University Enugu. Enugu State. Nigeria.
Igboyi Linus Sunday Ph.D
Nigerian College of Accountancy, Postgraduate Training Arm of ANAN, Kwall Plateau State. Nigeria.
Keywords: Return on Assets, Return on Equity, Return on Capital Employed, Company taxation, Correlation
Abstract
The Study determined the attributes of company taxation and financial performance listed consumer goods Companies in Nigeria. The specific objectives were to evaluate the relationship between company taxation (CT) and return on assets (ROA) of listed consumer goods companies in Nigeria, investigate the relationship between company taxation (CT) and return on equity (ROE) of listed consumer goods companies in Nigeria and ascertain the relationship between company taxation (CT) and return on capital employed (ROCE) of listed consumer goods companies in Nigeria. The independent variable company taxation proxied by log of company taxation (CT) while dependent variable as financial performance proxied by return on assets (ROA), return on equity (ROE)and return on capital employed (ROCE). The ex-post facto research design which made use of secondary data drawn from the annual report and accounts of four (4) firms in listed consumer goods company in Nigerian economy covering a period of ten (10) years from 2010 to 2019 both years inclusive. The theory in which this study pinned on was pecking order theory and cash agency theory. The E-views version 9.0 software statistical package was used to run the Panel ordinary least square (OLS) for the study. The Spearman rank-order Correlation model was applied in determining the extent of the relationship between the independent variable (company taxation) and dependent variable (financial performance) of companies under investigation. The Spearman rank-order Correlation result indicated that company taxation has positive significant relationship with return on assets (ROA), return on equity (ROE) and return on capital employed (ROCE) of listed consumer goods companies in Nigeria. The implication of this finding is that a percentage increase in company taxation paid will also result to an increase of the profit made by the companies under consideration. Based on the findings, the researcher recommended among others that the government needs to restructure the provision of tax incentives for better performance of firms and an introduction of tax reforms that allow adequate tax incentives for companies especially during financial crises and to cope with liquidity challenges.