Management Compensation, Corporate Social Responsibility and Tax Aggressiveness of Listed Non-Financial Firms in Nigeria

One of the major sources of revenue to government is through taxes levy on taxpayers including corporate organizations. However, companies find ways to reduce their tax liabilities (either legally or otherwise). To avoid penalties, there is a need for every company to set effective management policies and engage in social activities that are allowed by the tax laws as well as tax authorities. Therefore, this study examined the effect of management compensation and corporate social responsibilities on corporate tax aggressiveness practices among listed non-financial companies in Nigeria. The study specifically examined the effects of management compensation and corporate social responsibility on corporate tax aggressiveness practice. Ex-post facto research design was adopted. The sample of the study comprised of sixty-two companies chosen from the total population of one hundred and five manufacturing companies listed on the floor of the Nigerian Stock Exchange for the period ended 31st December 2024. The study covered the period spanning from 2012 to 2024. The data were analyzed using descriptive (mean, standard deviation, minimum and maximum values) in order to summarized the large set of data collected while the hypotheses were tested using random-effect regression analysis. The result of the study indicated that management compensation has a positive and significant effect on corporate tax aggressiveness practices of listed non-financial companies in Nigeria as shown by coefficient values of 4.3789 with p-value of 0.004 at 5% level of significance. The result implies that management can engage in corporate tax aggressiveness practice if his reward system is attributed to lower tax payment and consequently better reward system, indicating the higher the management compensation, the higher the level of corporate tax aggressiveness. On the other hand, the results of the corporate social responsibility has a positive but insignificant influence on corporate tax aggressiveness among listed non-financial companies in Nigeria. Therefore, the study concluded that management compensation has high tendency of increasing the practices among listed non-financial companies in Nigeria. The study therefore recommended that the reward or compensation of the management should not be solely tied to only financial performance as this could make the management to engage in some manipulations and dysfunctional behavior that will have bad reputation on the company.