INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,  
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)  
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue XII, December 2025  
Effects of Tax Planning Strategies on The Firm Value of Listed  
Manufacturing Firms in Nigeria: An Empirical Analysis.  
1 Isiaka Tunji Adelabu, 2 Abdul Ganiyu Salaudeen  
1 Department of Accountancy, Federal Polytechnic, Ede, Osun State  
2 Department of Business Administration, Federal Polytechnic, Ede, Osun State  
DOI : https://doi.org/10.51583/IJLTEMAS.2025.1412000088  
Received: 17 December 2025; Accepted: 22 December 2025; Published: 08 January 2026  
ABSTRACT  
This study examined the effects of tax planning strategies on the firm value of listed manufacturing firms in  
Nigeria: an empirical analysis. Tax planning is a significant aspect of business strategy and a crucial exercise  
for effective and efficient financial planning activity which requires attention from managers of all functional  
areas in the firm. This study is guided by two specific objectives which include: to examine the effect of tax  
planning strategies on firm value of listed manufacturing firms in Nigeria and to evaluate the effect of effective  
tax rate on the firm value of listed manufacturing firms in Nigeria. Relevant literatures were reviewed  
including conceptual, theoretical and empirical literatures. Ex post facto research design was adopted.  
Secondary data from the audited financial statement of the listed manufacturing firms on Nigerian Exchange  
Group were collected. Descriptive and inferential statistics were used to analyse the data. In conclusion the  
result of the regression shows that tax planning strategies have demonstrated to have an insignificant  
in Nigeria.  
relationship with farm value of listed manufacturing fir ms  
Income tax rate and effective marginal  
tax rate have negative relationship with firm value while effective tax rate has positive relationship with firm  
value. The study recommends that both people and corporations be encouraged to proactively adopt a thorough  
tax planning policy. Taxpayers might find chances to maximize credits, deductions, and tax-exempt  
investments by knowing the newest tax rules and consulting a knowledgeable tax professional.  
Keywords: Tax planning, Effective tax rate, Effective marginal tax rate, Income tax rate, Firm value  
INTRODUCTION  
In Nigeria, the complexity of tax regulations necessitates a comprehensive solution to tax payment compliance.  
The complexity of Nigeria's tax regulations necessitates a comprehensive response to non-compliance with tax  
regulations at both individual and systemic levels as several aspects of the economy and government are  
adversely affected as a result of non-compliance (Aondoakaa et al., 2025). As Nigeria strives for sustainable  
growth and development, understanding and effectively implementing tax planning strategies are crucial not  
only for optimizing financial outcomes but also for ensuring adherence to regulatory frameworks (Fadipe et  
al., 2025). Tax planning and compliance are pivotal aspects of financial management in Nigeria, integral to  
both individuals and businesses navigating the intricate landscape of fiscal responsibilities and economic  
development (Tanko, 2025). In developing countries, greater emphasis is given to the manufacturing sector to  
attain middle-income status through incentives geared towards encouraging investment in the sector over tax  
planning strategies.  
Managers make corporate tax decisions with the primary aim of minimizing tax burden and avoiding penalties.  
Managers often devise strategies to reduce corporate tax liabilities through tax planning with the view of  
having tax benefits. Thus, tax planning is a significant aspect of business strategy and a crucial exercise for  
effective and efficient financial planning activity which requires attention from managers of all functional  
areas in the firm (Mammal and Ismail, 2015). Thus, it needs a broader understanding of tax laws, and  
their applications specifically, allowances, exemptions, policies, guidelines, incentives, and relief available to  
corporate taxpayers. Neifar and Utz (2018) argued that though tax planning is capable of maximizing  
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ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue XII, December 2025  
shareholders' wealth, in an agency setting it could decrease firm value due to information asymmetry. This  
implies that managers may hide under the schemes to engage in managerial rent extractions at the expense of  
the shareholders, which leads to a negative valuation of the schemes by the investors.  
Tax Planning is considered a legitimate function as it does not contravene any provision of tax laws. The tax  
savings arising from tax planning represent a transfer of resources from the government to shareholders  
with the expectation of improved firm value . However, tax planning is associated with costs including  
direct costs, implementation costs, and transaction costs among others (Ftouhi et al, 2020). Therefore, there is  
a need to balance the benefits and associated costs of the strategy. Effective tax rate (ETR) represents firms’  
tax burden, lower ETR signified small tax liability and higher after-tax earnings and successful tax planning  
activities by the firms, whereas higher ETR indicates the inability of the firms to achieve less tax burden.  
Thus, effective and efficient tax management strategies are capable of increasing firms’ profitability through  
minimum tax liabilities and freeing more funds for investments which indirectly could lead to firm value.  
Further, an increase in firm after-tax earnings usually signals to investors that the firm value is good  
(Razali et al,2018). Therefore, tax planning activities through tax avoidance if successfully undertaken are  
expected to have a significant impact on firm value.  
Statement of problem  
Taxes constitute a high chunk of the costs that enterprises incur and stand to reduce the profitability of firms  
and this need to be minimized to its barest minimum especially in the manufacturing sector of the economy.  
The study opined that firms which receive tax incentives pay less tax and therefore recorded a higher Return  
on Equity (ROE) as well as Return on Assets (ROA). Tax planning, just like any other business management  
activity, has the aim of contributing to the improvement of the economic and financial performance of firms  
thereby helping to maximize return to owner’s investment. Reduction in tax liability should lead to reduction  
in the Effective Tax Rate (ETR) of such firms which on its own is an advantage to the firms in increasing their  
market value, but, as the manufacturing sector really maximized this strategy?  
A substantial body of the literature has focused on the impact and effect of tax planning on firm value as well  
as firm performance at various levels and sectors of the economy. However, one of the main factors that these  
studies on tax planning have seldom considered the relationship that could exist between tax planning  
strategies and firm’s value. While other studies had employed Effective Tax Rates (ETR), Book-Tax  
Difference (BTD) and Tax Savings as a proxy to tax planning to the outcome on the market value of firms,  
others have worked on some of these tax planning strategies and how they affect the performance of firms in  
Nigeria and beyond using mediating factors. Following all these mentioned above and more, this research  
work focused on effects of tax planning strategies on the firm value of listed manufacturing firms in Nigeria.  
Research questions  
The following questions will guide this study;  
i. Is there any effect of tax planning strategies on the firm value of listed manufacturing firms in Nigeria?  
ii. What are the effects of effective tax rate on the firm value of listed manufacturing firms in Nigeria??  
1.3 Objectives  
The specific objectives of this study are to;  
i. examine the effect of tax planning strategies on the firm value of listed manufacturing firms in Nigeria  
ii. evaluate the effect of effective tax rate on the firm value of listed manufacturing firms in Nigeria.  
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ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue XII, December 2025  
LITERATURE REVIEW  
Previous studies have delved into the diverse array of tax incentives and credits designed to encourage  
manufacturing expenditures, focusing on understanding how these fiscal mechanisms influence corporate  
decision-making processes. Innumerable studies have been done on tax planning in different countries, like  
studies of Agama et al. (2024) in Nigeria, Olanda and Marietza (2024) done in Indonesia Stock Exchange  
(BEI) for the 2018- 2022; Garcia-Bernardo et al., (2023) carried out in multinational corporations (MNCs)  
used Orbis’ unconsolidated data for the 2011-2015. However, there are few studies that covered manufacturing  
firms in Nigeria. Previous studies covered shorten period like 2011-2015; 2010-2021; 2018-2022. Hence, this  
study covered three principal variables of tax planning strategies which includes; effective marginal tax rates,  
effective tax rates, and taxable income rate for a 10 fiscal years between the periods of 2013-2023 listed  
consumer goods companies on the Nigeria Exchange Group (NGX) as at December, 2024.  
Conceptual review  
Tax Planning has been variously defined by different authors. Though these definitions may appear to differ  
from one another, the underlying meaning is all the same. Kaibel and Akenbor, (2024) defined tax planning as  
any action that must be taken by a business entity to inflate taxable income or reported earnings in a given  
period before tax loss expires. Another definition holds that tax planning includes not only strategies aimed at  
minimization of tax liability, but also considers the cash flow effect on the business in terms of when it is most  
advantageous for a business to settle tax liability without incurring any penalty. Adetola and Oke, (2016) also  
posited that, tax planning is a tool at the disposal of tax payer to reduce the burden of tax paid or payable. Tax  
planning is the arrangement of one’s financial affairs in such a way that without violating the legal provisions,  
full advantage is taken to allow tax exemptions, deductions, concessions, rebates, allowances and other  
benefits permitted under the Income Tax Act.  
Tax planning involves strategic efforts by individuals and corporations to reduce tax liabilities legally and  
efficiently. It includes leveraging deductions, exemptions, rebates, and allowances as allowed by law  
(Lakhotia, 2019). Effective Tax Rate (ETR) measures the proportion of a firm’s earnings paid as tax and is  
calculated by dividing total tax expense by pre-tax income (Hanlon & Heitzman, 2010). A lower ETR suggests  
effective use of tax strategies like credits and deductions, while a higher ETR indicates limited tax-saving  
opportunities. Although useful for evaluating tax efficiency and profitability (Desai & Dharmapala, 2009),  
ETR has limitations, such as including deferred taxes, which may distort actual cash taxes paid.  
The corporate tax planning points or strategies as contained in the Nigerian tax laws include: Choice of  
business type, choice of area of location and operation, choice of appropriate date of commencement and  
cessation of business, choice of accounting date, choice of financial structure, choice of method and method of  
non-current assets acquisition and choice of mode of compensating suppliers of capital (Nwaobia & Jayeoba,  
2016). To be more precise, tax variation refers to the wide variety of tax planning options that might be  
examined (Iormbagah et al, 2021) According to Hamilton et al., there are two categories of tax variation:  
individual tax mix and corporate tax mix. When compared to personal tax planning, which focuses minimizing  
taxable income by optimizing deductions and credits, corporate tax planning aims to reduce taxable income by  
optimizing the book tax difference and effective tax rate. The effective tax rate of a business is calculated by  
adding the corporate tax difference to the effective tax rate of the business and any deferred tax. In order to get  
started, this study may refer to Ihe (2012) comprehensive explanation of book tax difference. When asked for  
clarification, he said that he meant a subsidy the government provides a business in order to incentivize a  
certain line of work. In Nigeria, taxes come in several forms, including the pioneer law, capital allowance, and  
startup tax credit.  
Tax planning schemes become desirable to corporate bodies when there are chances of producing fewer tax  
liabilities without adverse effects on accounting profits. Hoffman's PL theory assumes a positive association  
between Tax planning and firm performance. Among the previous studies that examine the connection  
between Tax planning and financial performance are Ogundajo and Onakoya (2016), who found that  
Tax planning activities do not influence the profitability (ROA) of the listed manufacturing companies  
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in Nigeria, indicating that tax planning activities are not a major determinant of profitability. In Thailand,  
Thanjunpong and Awirothananon (2019), using 873 firms year observations for three years(2014-2016),  
found that tax planning(ETR) has a positive influence on profitability (ROE) but, tax to total assets  
(TAX/TA) is negative and statically significant to ROE. However, the use of ROA as a control variable  
which is also a key financial performance metric could be misleading. In another study, Zhu et al. (2023)  
investigated the impact of tax avoidance activities on firm profitability, using listed firms on the Ghana Stock  
Exchange. They measured tax avoidance using ETR and reported a significant negative of tax avoidance on  
profitability.  
Firm Value  
The two major aims of a firm are maximization of financial performance and value enhancement. Attainment  
of better financial performance is a short term goal while firm value focuses more on long term sustainability  
of the firm (Vu & Lee, 2021). Firm value is the main indicator when it comes to the evaluation of the  
performance of an organization. (Ni, Cheng & Huang, 2020). Some scholars argue that firm value can be  
measured using accounting based measures, others are of the view that stock market measures are superior.  
Among the measures of firm value is the book value of the firm. However the book value of the firm suffers  
from different methods of accounting treatment of accounting data. (Galpin, 2020). However the value of a  
firm can also be measured using the market value of the firm. Market value is computed as the product of  
outstanding shares and market price at a point in time.  
Empirical reviews  
Tanko (2025) examined the impact of financial attributes on the corporate tax planning of listed manufacturing  
firms in Nigeria. Data for his study was sourced from the annual reports of sampled manufacturing firms. The  
study used the panel data methodology for analysis. The study used fixed effect estimation to interpret the  
parsimonious model and random effect was used to interpret the moderated model. The study documented that  
financial leverage has a positive significant influence on the tax planning of the sampled manufacturing firms.  
While firm growth has a negative significant impact on the tax planning of listed manufacturing firms in  
Nigeria. REM has a positive significant impact on tax planning.  
Fadipe et al. (2025) evaluated the effect of tax policies on the sustainable development of Nigeria. Their study  
employed a survey research design. The population of the study was tax practitioners, public analysts, and  
FIRS staff involved in tax policy formulation, administration, and enforcement in Nigeria. Using a purposive  
sampling technique, 100 respondents were selected for the study. A validated and structured questionnaire was  
used to obtain data. One hundred copies of the questionnaire were administered. Data were analysed using  
descriptive and inferential (multiple regression) statistics were used to analyse the data at 0.05 level of  
significance. The result found that tax policy had significant effect of sustainable development (Human  
Development Index).  
Likewise, Salawu et al. (2017) examined the Granger causality between corporate tax planning and the value  
of non-financial listed firms in Nigeria for a period of eleven years (2004-2014). They found that no causality  
exists between tax planning and firm value. Christina (2019) studied the effect of corporate tax planning on  
the value of 43 Indonesian-listed companies from 2014 to 2016. Tax planning was proxy using ETR, Cash  
ETR, and tax savings. Firm value was measured using ROA. The regression results show that cash ETR has a  
significant negative impact on firm value. Further, the other two proxies of tax planning have no  
significant influence on firm value. However, the use of ROA to measure firm value could cause  
statistical inference to be misleading as it is effective in measuring a firm’s profitability. Khuong et al.  
(2020) found a positive and significant Link between tax avoidance and market-based performance (Tobins’  
Q).  
Similarly, Fagbemi et al. (2019) studied the influence of corporate TPL on the financial performance of  
systematically important banks in Nigeria. Eight banks were selected out of fifteen (15) listed commercial  
banks in Nigeria. Their findings indicate that tax planning activities proxied by ETR have a negative and  
significant impact on return on equity (ROE). Further, Adejumo and Sanyaolu (2020) studied the impact of  
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ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue XII, December 2025  
TPL activities on the profitability of banks in Nigeria using a dynamic panel model. They utilized nine (9)  
sample banks for a period of seven years (2012-2018). The empirical results from GMM reveal that ETR has a  
positive and significant impact on profitability (ROA). However, a different result could be obtained if a  
similar study were carried out in non-financial service firms. Similarly, Oyeshile and Adegbie (2020)  
examined the influence of corporate tax plannig on the financial performance of quoted food and  
beverage firms in Nigeria. They found out that ETR as a measure of tax planning has a positive and  
significant influence on ROA.  
Kayode and Folajinmi (2020) examined the influence of tax planning on the financial performance  
of Quoted food and beverages firms in Nigeria. They found that TPL practices proxies by ETR and thin  
capitalization (TCA) have no significant influence on earnings per share (EPS). On the other hand, Khuong et  
al. (2020) using Vietnam data found that tax avoidance activities proxied by current ETR, cash ETR &  
modified BTD have a significant negative impact on accounting-based measures of performance (ROE &  
ROA). Also, Timothy et al.(2021) found a significant positive influence of cash ETR (CETR) on value proxy  
by ROA using board compensation as a moderating variable in their study on seventy-one listed non-financial  
firms in Nigeria for eight years. The use of ROA to measure firm value could to an invalid conclusion as  
it measures firm profitability, not firm value. Based on the preceding discussion we hypothesize the following  
hypothesis.  
Among the studies that examined the mediating effect of profitability on the Link between tax planning  
and firm value is Chen et al. (2016) studied the mediating role of profitability on the Link between tax  
avoidance and the value of listed Chinese companies for a period of nine years (2004-2012). Using  
structural equation modeling (SEM) they found tax avoidance (ETR) has a direct negative significant  
impact on market value. This suggests that profitability explains the Link between tax avoidance and firm  
value of listed Chinese firms. However, similar research in Nigeria could produce different results. Similarly,  
Maharani et al (2018) investigated the effect of tax planning on company value with financial  
performance as an intervening variable of Indonesian listed manufacturing firms. The empirical analysis  
using SEM shows that tax planning has a significant negative direct effect on financial performance. Further,  
the results reveal that financial performance has no significant mediating effect on the Link between tax  
planning and companies value of Indonesian manufacturing firms.  
In another study, Izeybekhai and Odion (2018) studied the moderating effect of corporate governance on the  
Link between tax planning and firm value of listed firms in Nigeria between 2010 to 2016. The results from  
panel data regression show that ETR has a negative and significant influence on firm value (Tobin’s Q)  
but is statistically insignificant to share price. In addition, they also found that tax savings have a positive and  
significant influence on both share price and Tobin’s Q. Furthermore, the results show that Tobins’ Q is a  
better measurement of value against share price in terms of identifying tax planning activities. Based on the  
foregoing discussion, we hypothesize the following hypothesis  
Rui, (2019) studied the effect of corporate tax evasion on investment cash flow sensitivity Companies listed on  
the Shanghai Stock Exchange and the Shenzen Stock Exchange were included in the sample, with 5056  
company years of data from 2009 to 2015 included (a-share businesses). This article makes use of secondary  
data from the Wind Economic Database. The data was analyzed using a regression model. The results support  
the notion that firms with a propensity for active tax avoidance are more vulnerable to swings in cash flow  
from investments. It should be noted that tax avoidance could definitely has positive effects on cash flow of  
the companies in that, a company that avoid tax has the advantage of increasing profit and dividend payable to  
the shareholders of the company that its counterpart who pays all the taxes as at when due.  
Williams (2024) investigated tax planning and financial performance of firms in Ghana from the period of  
2012-2017. The result showed a negative relationship between effective tax rate and financial performance.  
Putri et al., (2024) examined a study on the intricate interplay between strategic tax planning, Research and  
Development (R&D) expenditures, and firm performance. A meticulous synthesis of diverse scholarly  
contributions highlights the significant impact of tax incentives, such as R&D tax credits and accelerated  
depreciation, in fostering innovation. The exploration extends to the determinants of R&D spending,  
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encompassing industry characteristics, firm size, and technological intensity, and offering a nuanced  
understanding of the multifaceted nature of corporate decision-making. Furthermore, the review underscores  
the dynamic evolution of tax policies and their implications for corporate behavior, emphasizing the need for  
adaptability in strategic tax planning.  
Theoretical review  
This study reviews the following two theories Hoffman's tax planning theory and tax minimization theory.  
This study is hinged on Hoffman's tax planning theory. This theory is relevant to this study because firms  
exploit tax legislation loopholes while maintaining a reasonable degree of influence to minimize tax burden  
and boost firm profits after tax  
Hoffman Tax Planning Theory  
Hoffman's tax planning theory examined the nexus between tax planning and firm value (1961). Fagbemi, et  
al. (2019) demonstrates that this tax planning approach is appropriate to adopt. Hoffman noted some  
complexities and loopholes in tax laws as a result of concealed goals and concluded that good tax schemes are  
carried out with specific legal conceptions, and business entities’ compliance with these rules results in tax  
savings. Akintoye, et al., (2020) established four principles of tax planning, which include the complexity of  
planning, multiplicity of benefits, holistic application, and ignorance of tax planning strategy. Tax planning  
practices are not tactics, because they cannot be maintained for a long time. Consequently, tax planning  
strategy promotes and enhances companies’ performance if they are allowed to operate freely within  
applicable tax legislation (Akintoye et al., 2020).  
Tax Minimization Theory  
This theory posits that the primary goal of tax planning is to minimize the amount of tax paid by taking  
advantage of all available statutory deductions, credits, exemptions, and structures. Boukobza, (1995), tax  
optimisation is a tax choice that aims to take advantage of the disparities in the various local and international  
tax laws, on condition that the tax choice adopted is neither artificial nor abusive, in order to avoid moving  
towards tax avoidance or evasion practices. Strategies in this theory focus on optimizing financial decisions to  
reduce taxable income or lower the applicable tax rate where taxpayers identify and utilize all applicable  
deductions (such as expenses related to business, investments, or charitable contributions) and tax credits  
(which directly reduce tax liability) to reduce taxable income and overall taxes owed (Bazart, et al., 2020).  
Strategic income deferral and acceleration because taxpayers can defer income to future years or accelerate  
deductions into the current year to manage taxable income effectively (Adetola & Oke (2016). For example,  
delaying the receipt of income until a lower tax year or prepaying deductible expenses can reduce current tax  
liabilities. Firms disclose information including disclosure of information related to tax lies somewhere  
between no disclosure and full disclosure, depending on motivations (Thu Anh & Vinh, 2021). This theory  
assumes that motivations differ and have a significant effect on the level of disclosure among the firms and  
also vary between countries. Firms were mandatory to publish information regarding their business forecast to  
signal good investment opportunities.  
METHODOLOGY  
This study employed ex post facto research design. The choice of the design was because the data needed is  
readily available in the audited financial statement of the sampled listed manufacturing firms. The data used  
were collected from secondary source through the audited financial statement of the 10 selected listed  
manufacturing firms for a period of 2015 to 2024. The study adopted the model of Owusu and Weir (2017) to  
meet the specific objectives of the study. The model of the study is specified in functional and linear forms as  
follows:  
MV = f (ITR, EMTR, ETR) ---------------------------------------------------------------------(i)  
MV =β0 + β1ITRit+ β2EMTRit + β3ETRit + εit ----------------------------------- (ii)  
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Where:  
MV = N u mb e r of shares multiply by Market price per share  
ETR = effective tax rate  
EMTR= effective marginal tax rate  
ITR = income tax rate  
The independent variable for this study is tax planning strategies which were proxy by effective tax rate,  
effective marginal tax rate, and income tax rate. The dependent variable is the firm value, this was proxy by  
the Market value  
Table 4.0: Measurement of variables  
Variable  
abbreviation  
Measurement  
independent variable  
tax planning strategies  
TPS  
effective tax rate, effective marginal tax  
rate, and tax rates  
effective tax rate  
ETR  
cash effective tax (%) = tax paid/ profit  
before tax  
effective marginal tax rate EMTR  
change in tax/change in taxable income  
income tax rate  
ITR  
income effective tax(%) = tax  
expenses/profit before tax  
dependent variable  
firm value  
MV  
Number of shares multiply by Market  
price per share  
Source: authors’ computation (2025)  
RESULTS AND DISCUSSION OF FINDINGS  
Analysis of Descriptive Statistics  
Table 4.1 shows that mean and median values of market value (MV) are 1121.323 and 24.81500 respectively.  
The reported maximum and minimum values of MV are 16281.00 and 0.500000 respectively. The standard  
deviation and skewness values of MV are 2585.756 and 3.421059 respectively. This result established that MV  
is positively skewed toward the right tail. Table 4.1 indicates that kurtosis value of MV (16.47318) is greater  
than normal kurtosis (3). This means that MV is leptokurtic which does not mirror normal distribution.  
Table 4.1 indicates that average and middle values of income tax rate (ITR) are 0.285128 and 0.289792  
respectively. The reported maximum and minimum values of ITR are 1.283526 and 0.000000 respectively.  
The result further shows that standard deviation and skewness values of ITR are 0.205712 and 1.462234  
respectively. This result indicates that data distribution of ITR is positively skewed toward the right tail. The  
result shows that kurtosis value of ITR (8.174860) is greater than normal kurtosis value (3). Hence, it is  
affirmed that data distribution of ITR is leptokurtic which does not mirror normal distribution.  
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Descriptive result on Table 4.1 demonstrates that mean and median values of effective tax rate (ETR) are  
0.234271 and 0.145498 respectively. The result indicates that maximum and minimum values of ETR are  
2.080375 and 0.000000 respectively. Descriptive result shows that standard deviation and skewness values of  
ETR are 0.306668 and 3.163958 respectively. This means that data distribution of ETR is positively skewed.  
Table 4.1 indicates that kurtosis value of ETR is 3.163958 which means that data distribution is leptokurtic.  
Table 4.1 indicates that average and median values of effective marginal tax rate (EMTR) are 2.485022 and  
0.000000 respectively. The reported maximum and minimum values of EMTR are 162.7412 and -1.000000  
respectively. Descriptive result on table 4.1 shows that standard deviation and skewness values of EMTR are  
16.50416 and 9.312664 respectively. This means that data distribution of EMTR is positively skewed. The  
result on table 4.3 demonstrates that kurtosis value of EMTR (90.72558) is greater than normal kurtosis (3).  
Table 4.1: Descriptive Statistics  
MV  
ITR  
ETR  
EMTR  
2.485022  
0.000000  
162.7412  
-1.000000  
16.50416  
9.312664  
90.72558  
1121.323  
24.81500  
16281.00  
0.500000  
2585.756  
3.421059  
16.47318  
0.285128  
0.289792  
1.283526  
0.000000  
0.205712  
1.462234  
8.174860  
0.234271  
0.145498  
2.080375  
0.000000  
0.306668  
3.163958  
16.62707  
Mean  
Median  
Maximum  
Minimum  
Std. Dev.  
Skewness  
Kurtosis  
Source: Author’s Computation (2025)  
To test for normality, the study employed the normality test. According to this test, the null hypothesis is that  
the residual are normally distributed, while the alternative hypothesis is that the residual are not normally  
distributed. Thus, if the probability value of the Jarque-Bera statistics is greater than 0.05 (5%), then we accept  
the null hypothesis that the residual is normally distributed; but if the probability value of the Jarque-Bera  
statistics is less than 0.05 (5%), then we reject the null hypothesis that the residual is not normally distributed.  
Table 4.2 shows that Jarque-bera and prob. value are 944.5596 and 0.00000 respectively. It could be seen that  
prob. value (0.00000) is less than significance value (0.05). Therefore, the result implies that data distribution  
of proxies for tax planning strategies and firm value is not normally distributed.  
Table 4.2: Normality Test  
Reported Values  
944.5596  
0.0000  
Jarque-bera  
Prob. Value  
Source: Author’s Computation (2025)  
Hausman test is employed in order to compare the results of the fixed effect and random effect models so as to  
decide on the one to choose. The assumption for Hausman test is that fixed effect or random effect has no  
relationship with other regressors and there is consistent in the random effect than the fixed effect. If this  
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assumption is rejected, the random effect, Gauss-Markov theorem is being violated and the estimates will be  
seen to be biased and inconsistent while the fixed effect model is seen to be consistent and unbiased. In a  
nutshell, when the assumption is rejected, fixed effect model should be used and vice-versa. The table 4.3  
shows that prob. value of Hausman test (0.5494) is greater than significance value (0.05). In line with this  
result, null hypothesis is accepted which means that random effect estimate is the most suitable to examine  
how tax planning affects the firm value of manufacturing companies in Nigeria.  
Table 4.3 shows that random effect estimate have R2 and Adjusted R2 are 0.002862 and -0.028299  
respectively. It could be seen that effective tax rate (ETR), income tax rate (ITR) and effective marginal tax  
rate (EMTR) do not account for any variation in the level of firm value. Hence, there are numerous factors that  
determine the extent of firm value.  
MV = f (ITR, EMTR, ETR) ------------------------------------------------------------------------------(i)  
MV =β0 + β1ITRit+ β2EMTRit + β3ETRit + εit --------------------------------------------(ii)  
MV = 1162.672 -0.182033(ITR) - 0.473448(EMTR) + 5.995043(ETR)-----(iii)  
The mathematical expression indicates that decrease in income tax rate will lead to increase in the market  
value (MV). It could be seen that both variables are moving in the opposite direction. Hence, there is negative  
relationship between income tax rate and firm value of listed manufacturing companies in Nigeria.  
The econometric model shows that decrease in the effective marginal tax rate (EMTR) will lead to increase in  
the market value. Hence, it is established that effective marginal tax rate has negative relationship with market  
value of listed manufacturing firms in Nigeria.  
The substituted equation demonstrates that increase in the income tax rate (ITR) will consequently will lead to  
increase in the market value. Therefore, it is deduced that there is positive relationship between income tax rate  
and firm value of listed manufacturing firms in Nigeria.  
F-statistics is a test of determine the overall significance value of independent variables on dependent variable.  
The random effect on Table 4.3 shows that f-stat and prob. value are 0.091836 and 0.964378 respectively. The  
prob. value (0.964378) is greater than significance value (0.05). Hence, the result demonstrates that  
econometric model is not good fit.  
Examine the Effect of Tax Planning Strategies On The Firm Value Of Listed Non-Financial Firms in  
Nigeria  
The random effect on table 4.3 shows that prob. value of ITR, ETR and EMTR are 0.8559, 0.9891 and 0.6370  
respectively. The result shows that all reported prob. value for measures of tax planning are less than  
significant value (0.05). Therefore, the statistical result depicts that tax planning strategies have insignificant  
effect on the firm value of listed manufacturing firm.  
Evaluate the effect of effective tax rate on the firm value of listed non-financial firms in Nigeria.  
The random effect estimate on table 4.3 shows that t-stat and prob. value of ETR and MV are 0.013659 and  
0.9891 respectively. The result affirms that prob. value (0.9891) is greater than significant value (0.05). Hence,  
it is deduced that effective tax rate has insignificant and positive effect on firm value of listed manufacturing  
firms in Nigeria.  
Table 4.3: Panel Least Square  
Fixed Effect  
Random Effect  
Coefficient t-Statistic  
Prob.  
Coefficient t-Statistic  
Prob.  
Variable  
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INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,  
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C
1150.989  
-74.42782  
7.083709  
-4.065894  
0.795725  
0.767549  
28.24140  
0.000000  
4.946469  
-0.115499  
0.016113  
-0.511077  
0.0000  
0.9083  
0.9872  
0.6106  
1162.672  
-117.1574  
5.995043  
-3.762019  
0.002862  
-0.028299  
0.091836  
0.964378  
1.401448  
-0.182033  
0.013659  
-0.473448  
0.1643  
0.8559  
0.9891  
0.6370  
ITR  
ETR  
EMTR  
R-squared  
Adj. R2  
F-statistic  
Prob(F-  
stat)  
0.710843  
0.649391  
Durbin  
Watson  
stat  
0.5494  
P. value  
Hausman  
Source: Author’s Computation (2025)  
DISCUSSION OF FINDINGS  
The study found that there is negative relationship between income tax rate and firm value of listed  
manufacturing firms in Nigeria. This finding implies that reduction in statutory tax burden increases firm’s  
value.  
Also, it was discovered that effective marginal tax rate has negative effect on firm value of listed  
manufacturing firms in Nigeria. This finding explained that reduction in the tax rates on incremental incomes  
will serves as incentive for firm expansion and improved firm’s valuation in the stock market.  
Finally, it was revealed that effective tax rate has positive relationship with firm value of listed manufacturing  
firms in Nigeria. This finding indicates that firms with higher effective annual tax payments are more  
profitable, compliant, and transparent which enhances investor confidence and improved market valuation  
CONCLUSIONS AND RECOMMENDATIONS  
In conclusion, effective tax planning strategies lead to optimal financial outcomes, compliance with tax  
regulations, and savings. Implementing well-considered tax planning strategies not only reduces the tax burden  
for individuals and businesses but also promotes financial stability and growth. By applying the various  
exemptions, deductions, and legal provisions at their disposal, taxpayers can enhance their overall financial  
stability and safeguard their assets. Continually reviewing and adapting these strategies as tax laws and  
economic conditions change is critical to maintaining optimal tax efficiency and achieving long-term financial  
success.  
The study recommends that both people and corporations be encouraged to proactively adopt a thorough tax  
planning policy. Taxpayers might find chances to maximize credits, deductions, and tax-exempt investments  
by knowing the newest tax rules and consulting a knowledgeable tax professional. To maintain continuous  
compliance and financial efficiency, strategies can be adjusted with the support of regular reviews of financial  
objectives and tax responsibilities. In the long run, proactive tax preparation not only reduces risks but also  
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boosts wealth and firm value.  
This study is not without limitations though secondary data was collected from the audited financial statement  
of the sampled listed manufacturing firms in Nigeria, there are some missing data for some listed  
manufacturing firms for some years. Also sample taken was only from listed manufacturing firms, the result  
may not be generalized on other firms that are not manufacturing firms.  
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