BOARD DIRECTOR REPUTATION CAPITAL, INTERLOCKING BOARD MEMBERSHIP, EXECUTIVE REMUNERATION AND TAX AVOIDANCE OF LISTED FIRMS IN NIGERIA
BOARD DIRECTOR REPUTATION CAPITAL, INTERLOCKING BOARD MEMBERSHIP, EXECUTIVE REMUNERATION AND TAX AVOIDANCE OF LISTED FIRMS IN NIGERIA

Summary/Abstract: The aim of this study is to empirically investigate if board director reputation capital, interlocking board membership and executive remuneration contribute to tax avoidance of listed financial firms in Nigeria. The study employed the panel generalized method of moment. Data from 2010 to 2020 was sourced from a sample of forty (40) listed financial firms on the Nigerian Stock Exchange. The findings obtained indicate that board director reputation capital (BODRC) and interlocking board membership (IBM) exerted a negative and significant on effective tax rate while executive remuneration was positive and significant on effective tax rate. Both leverage and firm size were positive on effective tax rate in the sampled firms. The study concludes that for firms to drive tax avoidance and align the interest of managers with those of the shareholders, board director reputation capital, interlocking board membership and executive remuneration are key factors to put into consideration towards achieving the goal of wealth maximization. This study contributes to knowledge, being the first to report on how board director reputation capital, interlocking board membership and executive remuneration drive tax avoidance of firms in Nigeria and in Sub-Saharan Africa at large. The study recommends that firms should consciously design a corporate board with strong network tie consisting of director with high reputation capital, interlocking board membership tie and with well pegged motivating executive remuneration to bolster the morale of the board echelons in order to influence them to engage in result oriented activities geared towards tax avoidance and shareholders’ wealth maximization.

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