BOARD OF DIRECTORS’ POLITICAL CONNECTION AND TAX AGGRESSIVENESS AMONG LISTED COMPANIES IN NIGERIA

Abstract

This study investigates the impact of Board of Directors Political Connections (BDPC) on tax aggressiveness among 29 consumer and industrial goods companies listed in the Nigerian Exchange Group (NGX) from 2019–2024. Two econometric models were employed to measure tax aggressiveness: Model 1 utilized the Effective Tax Rate (ETR) under a Panel Random Effects regression. In contrast, Model 2 adopted Book-Tax Differences (BTD) within a Panel Fixed Effects framework. Both models incorporated BDPC as the primary independent variable, alongside control variables, including Operating Cash Flow Ratio (OCFR), Debt-to-Asset Ratio (DAR), Firm Size (FS), and Board Independence (BI). The results from both models revealed that BDPC does not statistically impact tax aggressiveness. The R-squared values exceeded 60% in both models, indicating moderate explanatory power, yet the overall models lacked statistical significance as reflected in their F-statistics. These findings suggest that political affiliations at the board level, as well as conventional governance and financial metrics, are not reliable predictors of tax aggressiveness in the Nigerian context. Instead, the study underscores the possible influence of unobserved firm-specific characteristics, institutional quality, and broader systemic factors. Consequently, policy efforts aimed at curbing aggressive tax practices in Nigeria should prioritize institutional reforms, regulatory enforcement, and tax transparency, rather than focusing solely on-board composition or political ties.