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The nexus between standalone risk committees and tax aggressiveness: evidence from Nigeria

Author

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  • Edosa Joshua Aronmwan

    (University of Benin)

  • Sebastine Abhus Ogbaisi

    (Samuel Adegboyega University)

Abstract

Effective management of risk especially tax risk is arguably hinged on a framework of corporate governance that ensures amongst others that the board of directors is effective and efficient in delegating some of its roles and duties to well-structured committees, without relinquishing its responsibilities. Based on this assertion, this paper inquires into the link between constituting a standalone risk management committee and tax aggressiveness in nonfinancial listed companies in Nigeria. A combination of ex post facto research design and quantitative approach was employed while data were sourced from the financials of eighty (80) firms for twelve (12) years (2008–2019). The censored Tobit estimator was used to evaluate the model for the study, and the finding agrees with the expectation of the agency theory that the presence of a standalone risk committee mitigates tax aggressive practice in Nigeria. The finding has several contributions: first, it extends the literature on the link between corporate governance and organisational behaviour with emphasis on tax aggressiveness. Second, it provides evidence on how the establishment of a risk management committee impacts aggressive tax behaviour, thus, supporting the position of the Nigerian Code of Corporate Governance 2018 on the establishment of risk committees. Flowing from this finding, the study recommends strict regulatory compliance by those charged with governance (internal and external) with the requirements for a risk committee as this will improve governance and reduce the risk emanating from tax aggressiveness.

Suggested Citation

  • Edosa Joshua Aronmwan & Sebastine Abhus Ogbaisi, 2022. "The nexus between standalone risk committees and tax aggressiveness: evidence from Nigeria," Future Business Journal, Springer, vol. 8(1), pages 1-12, December.
    • Handle: RePEc:spr:futbus:v:8:y:2022:i:1:d:10.1186_s43093-022-00120-0
    DOI: 10.1186/s43093-022-00120-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Risk committee; Tax aggressiveness; Corporate governance; Effective tax rate; Nonfinancial companies;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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