MODERATING EFFECT OF MANAGERIAL OWNERSHIP ON THE RELATIONSHIP BETWEEN TAX PLANNING AND FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

The study examined the moderating effect of managerial ownership on the relationship between tax
planning and financial performance of listed deposit money banks in Nigeria. The study used secondary
data of 12 listed DMBs in Nigeria which were extracted from the annual reports and accounts of the
sampled banks for the period 2012 to 2023. The data collected for the study were analyze using panel
data analysis. The study also revealed that Book Tax Difference (BTD) has positive and significant effect
on Return on Assets (ROA). On the other hand, the study documented that managerial ownership has
positive and significant effect on ROA. It was revealed that managerial ownership positively and
significantly moderates the effect of residual of BTD on ROA and negatively but significantly moderated
the effect of CETR on ROA. The study recommended that given the significant positive impact of BTD on
ROA, DBMs should prioritize optimizing cash tax payments to enhance financial performance and aim to
minimize discrepancies between book and tax reporting to prevent negative impacts on financial
performance. Regulatory agencies should set in the rate at which managers/directors should owned
shares in banks in order to improve governance effectiveness and in return increase financial
performance. Corporate governance policies could encourage banks to adopt higher levels of managerial
ownership to enhance overall governance effectiveness. Also, considering how managerial ownership
moderates the effect of tax planning on financial performance, banks shareholder should increase
managerial ownership to align managerial interests with shareholder interests and potentially improve
financial performance.