Effect of Board Characteristics on Tax Aggressiveness of Quoted Deposit Money Banks in Nigeria

Abstract

Nigeria has faced recurring financial challenges over the years, leading to poor performance among its financial institutions. These difficulties have been largely linked to inadequate corporate governance practices. This study looks at how board characteristics affect tax aggression among Nigerian listed deposit money banks from 2012 to 2022. The sample comprises nine deposit money banks listed on the Nigerian Exchange Group utilizing a robust random effect regression model after diagnostic tests. The findings revealed that board independence and board size have no significant effect on the cash effective tax rate of Nigeria's listed deposit money banks over the study period. The findings also indicate that board gender diversity has a significant favourable effect on the cash effective tax rate of quoted deposit money banks in Nigeria over the period under consideration. The study suggests, among other things, that Nigerian deposit money banks should maintain a smaller board size, ideally comprising five members with substantial expertise in tax matters, to facilitate swift decision-making and mitigate tax aggressiveness. Furthermore, it recommends reducing the proportion of female directors on boards to one-third, while ensuring that those appointed possess significant experience in tax affairs to help curb tax aggressiveness within Nigerian deposit money banks.