BOARD DILIGENCE AND TAX PLANNING: EVIDENCE FROM NIGERIA’S AGRICULTURAL SECTOR
Authors: Michael Ikelegbe Alutosa, Chinedu Francis Ikelegbe
DOI: 10.5281/zenodo.17376760
Published: October 2025
Abstract
<p><em>Low meeting frequencies, and poor attendance to board meetings are major corporate governance weaknesses that make it difficult or even impossible for firm directors to exert checked influence over tax-related decisions made by the management. This problem often paves room for the adoption of questionably aggressive or opaque tax strategies that threaten not just the long-term sustainability of the firm but also investor trust. Hence, this study examined whether more diligent boards engage in more tax planning using the Nigerian Agricultural Sector as the source of evidence. Board diligence was measured using number of meetings while tax planning was measured using a binary classification based on the effective tax rate, coded as 1 if ETR is less than 30% (tax avoidance) and 0 if Effective Tax rate is 30% or more. Ex-post facto research design was adopted. The population and sample size were made up of five listed agricultural firms in Nigeria. Secondary data were collected from the annual repost of the firms over ten years, 2015-2024. In addition to the descriptive analysis carried out, probit model was used to test the hypothesis. The finding revealed that more diligent boards significantly reduce the likelihood of tax planning among listed agricultural firms in Nigeria (β = -0.4774; p = 0.0006). In conclusion, firms with more engaged boards may be less likely to exploit tax loopholes, contributing to a more ethical and responsible corporate culture. The study recommends that regulatory bodies such as the Securities and Exchange Commission (SEC) and the Nigerian Exchange Group should create and enforce policies that mandate a minimum frequency of board meetings for listed agricultural firms. These policies would help ensure greater board diligence and could mitigate aggressive tax planning, aligning the firms' financial behavior with broader national tax compliance goals. </em></p>
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