EFFECT OF TAXATION ON CORPORATE INVESTMENT OF LISTED CONSUMERGOODS FIRMS IN NIGERIA

Abstract

This study examined the influence of taxation on corporate investment among listed consumer
goods firms in Nigeria from 2013 to 2022, employing an ex post facto research design.
Secondary panel data were obtained from seventeen (17) consumer goods companies listed on
the Nigerian Exchange Group. A purposive sampling technique was applied, guided by
inclusion and exclusion criteria to ensure that only firms consistently listed and operational
throughout the study period were selected. Multiple regression analysis was used to assess the
effects of taxation variables Effective Tax Rate (ETR), Cash Effective Tax Rate (CETR), and
Tax Savings (TS) on corporate investment. The results show that both ETR and CETR have
positive but statistically insignificant relationships with corporate investment, implying that
nominal tax measures do not substantially influence investment decisions in the sector.
Conversely, tax savings exert a positive and statistically significant impact on corporate
investment, suggesting that effective tax planning strengthens firms’ investment capacity. The
study concludes that while statutory tax structures may not directly impact investment levels,
the ability to generate tax savings plays a crucial role in promoting corporate investment. It
recommends that consumer goods firms adopt effective tax planning strategies to maximize
savings and reinvestment opportunities. Furthermore, regulatory authorities are encouraged to
develop supportive tax policies that incentivize investment while maintaining fiscal discipline.