Corporate Governance Mechanisms and Tax Incentive Utilisation: Empirical Evidence from Nigerian Non-Financial Firms

Abstract

This study investigated the impact of corporate governance mechanisms on tax incentive utilisation among 10 non-financial firms listed in Nigeria, using a panel dataset spanning 2014–2023. Employing Generalised Least Squares (GLS) regression, the research found that board gender diversity, board financial expertise, and board meeting frequency all significantly and positively influence the utilisation of tax holidays, loss relief, and capital allowances. Board financial expertise emerged as the most influential factor, demonstrating the strongest and most consistent positive effects across all tax incentive measures (e.g., β = 0.163, p < 0.001 for tax holidays; β = 0.792, p < 0.01 for loss relief; β = 1.132, p < 0.01 for capital allowances). This highlights the critical role of financial acumen in identifying and securing tax benefits. Board gender diversity also significantly enhanced tax incentive utilization (e.g., β = 0.075, p < 0.01 for tax holidays; β = 0.394, p < 0.05 for loss relief; β = 0.522, p < 0.05 for capital allowances), as did board meeting frequency (e.g., β=0.041, p<0.01 for tax holidays; β = 0.318, p < 0.001 for loss relief; β = 0.384, p < 0.001 for capital allowances). These findings align with agency theory, upper echelon theory, and resource dependence perspectives, suggesting that robust governance structures facilitate the strategic utilisation of legitimate tax incentives. The study contributes to the literature by emphasising proactive tax planning over avoidance, offering valuable insights for tax policy, corporate governance reforms, and regulatory frameworks in emerging economies.