FIRM CHARACTERISTICS AND CORPORATE TAX AVOIDANCE OF DEPOSIT MONEY BANKS IN NIGERIA

Corporate tax avoidance has, especially since 2001 received vast empirical examination in Western academe. The same can however not be said in respect of tax avoidance by corporate entities in Nigeria. This study therefore examined the effect of firm characteristics such as firm size, financial leverage, profitability and capital intensity on corporate tax avoidance among deposit money banks (DMBs) in Nigeria over the period 2006 to 2014. Data was gathered purely from secondary sources in the form of annual proxy financial statements. Using a fixed effect model estimation technique, and a sample of 126 firm-year observations, the study found that among the studied characteristics only firm size significantly affects banks’ tax avoidance. A significant inverse association was found between firm size and tax avoidance among the studied DMBs which supports the political power hypothesis. Overall, however the study concluded that firm characteristics explain only a modicum of tax avoidance among the studied DMBs. There is therefore much need to broaden the scope of investigation to embrace other potential explanatory factors such as board of directors-related corporate governance mechanisms and internal control systems.