MODERATING ROLE OF PROFITABILITY ON THE IMPACT OF OWNERSHIP STRUCTURE ON TAX AVOIDANCE OF LISTED MANUFACTURING FIRMS IN NIGERIA

Tax avoidance is a scheme used by taxpayers to reduce tax liability in order to increase distributable profit for the owners to the detriment of the government. What role profitability plays in moderating how shareholders influence tax avoidance among listed manufacturing firms in Nigeria is the main focus in this study. The study targeted all 56 manufacturing firms listed on the Nigerian Exchange Group as of December 31, 2023, but after excluding firms with incomplete data, loss year observations, and those delisted during the study period, a final sample of 37 firms with 342 firm-year observations was selected. The quasiexperimental research design was adopted and secondary quantitative data from 2013 to 2023 on tax avoidance, ownership structure, return on assets and firm size were extracted and analyze using panel regression in STATA to test the study’s hypotheses. The study found that the impact of both institutional and managerial ownership on tax avoidance is positive and significant while foreign ownership had significant and negative impact on tax avoidance of listed manufacturing firms in Nigeria. The study provide evidence that return on assets had a significant and positive impact on tax avoidance and its moderating role on institutional, managerial and foreign ownerships was significant and positive on tax avoidance among the sampled listed manufacturing firms in Nigeria. Therefore, the study concluded that profitability moderates the impact of ownership structure on tax avoidance and recommends among others that the management of listed manufacturing firms in Nigeria should ensure the protection of the firm’s image and reputation while engaging in tax avoidance practices in view of the growing concerns on the link between such practice and business ethics.