Capital Structure and Tax Planning of Listed Consumer Goods Firms in Nigeria: Moderating Effects of Institutional Ownership
Moses Babatunde Olanisebe
*
Department of Accounting, Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria.
Olubode Olusegun Oladele
Department of Accounting, Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria.
Olayinka Olufisayo Akinlo
Department of Accounting, Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
Highly leveraged firms are more likely to pursue tax planning strategies to manage their financial obligations and enhance shareholder value since the firms with higher leverage benefit from interest deductibility, reducing taxable income. This study examined the moderating effects of institutional ownership on the relationship between capital structure and tax planning of listed consumer goods firms in Nigeria. The study employed a correlational research design, using a sample size of sixteen (16) firms from a total population of twenty-one (21) listed consumer goods firms on the Nigerian Exchange (NGX) group, with data extracted from the annual reports and accounts of the sampled firms for a period of twelve years (2014–2025). Data was analyzed using descriptive statistics to provide a summary for the variables, and correlation analysis was carried out using the Pearson correlation technique. The study found that capital structure has an insignificant effect on the tax planning of sampled firms. Also, institutional ownership has a positive and insignificant impact on the tax planning activities. Meanwhile, institutional ownership moderates the relationship between capital structure and the tax planning strategies of the sampled firm. It was found that R² increased from 26% before moderation to 30% after introducing a moderator variable. This suggests that the model now explains 4% more of the variability in the data due to the introduction of a moderator, which is the institutional ownership. The study concludes that capital structure does not influence tax planning, institutional ownership has insignificant influence on tax planning, and institutional ownership moderates the relationship between capital structure and tax planning of listed consumer goods firms in Nigeria. Hence, the study recommends that the management of listed consumer goods firms in Nigeria should optimize capital structure with moderate leverage to unlock tax planning benefits. Institutional investors are recommended to strengthen oversight, capitalizing on their moderating role to boost tax efficiency and firm value in listed consumer goods firms.
Keywords: Capital structure, institutional ownership, tax planning, listed consumer goods firms