TAX MANAGEMENT: DOES EQUITY OWNERSHIP MATTER? A MEASUREMENT APPROACH

Abstract

This study investigates how equity ownership affects tax management among publicly listed companies in Nigeria. Specifically, it examines the influence of institutional, public, and foreign ownership on three complementary measures of tax management: book-tax difference (BTD), cash effective tax rate (Cash ETR), and current effective tax rate (Current ETR). The study employed a longitudinal research design. The population for the study consists of one hundred and fifty-five (155) listed companies on the Nigerian Exchange Group (NXG) Plc. Judgmental sampling with the help of filter criteria was employed to sample ninety-two (92) Nigerian publicly listed companies. Secondary data were extracted from the published annual reports and accounts of 92 firms listed on the Nigerian Exchange Group Plc over 10 years (2015–2024), comprising 920 observations. The data were analysed using the Unobserved Effects Model (fixed and random effects), supported by pooled OLS and Hausman specification tests. The findings show that institutional ownership was negatively and significantly related to the book-tax difference and positively associated with the current effective tax rate but had no significant effect on the cash effective tax rate. Public ownership was positively associated with the book-tax difference and the current effective tax rate but not significantly related to the cash effective tax rate. Foreign ownership was negatively associated with all three measures of tax aggressiveness. The study recommends that policymakers promote institutional investor participation in listed companies, strengthen disclosure requirements for companies with dispersed ownership, and recognize foreign ownership as a governance mechanism supporting tax compliance.