Nigerian Journal of Banking and Financial Issues (NJBFI)

Tax Variability And Its Impact On The Financial Performance Of Non- Financial Firms In Nigeria: An Empirical Investigation

Abstract

The study examined tax variability and its impact on the financial performance of non- financial firms in Nigeria. Specifically, it evaluated at how book tax differences affected the profitability of non-financial businesses and how effective tax rates influenced the profitability of non- financial firms in Nigerian. The correlation between the dependent variable (Return on Asset) and the other factors was determined using a post-hoc analysis of secondary data (Book tax differences and effective tax rate). One hundred and thirteen (113) non-financial, multinational corporations were included in the study's population as listed on the Nigeria Exchange Group. The 76 selected non-financial firms in Nigeria were chosen using a purposeful sampling approach. The Generalized Method of Moments (GMM) estimator was used to verified information culled from the annual reports of participating companies over an 14-year period (2010-2023). Based on the findings of the GMM estimator, the book tax difference has a positive and substantial influence on the ROA of non-financial businesses whereas the effective tax rate has a negative and negligible effect on the ROA of listed non-financial enterprises. Consequent on the findings, the study concluded that tax variability has significant effect on financial performance of non-financial firm in Nigeria.