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Tax Administration and Financial Performance of Manufacturing Firms in Kenya: A literature Review

Author

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  • Dickson Njoroge Wangare

    (School of Business, TUM)

Abstract

This study explores the impact of tax administration practices on the financial performance of manufacturing firms in Kenya. The manufacturing sector is crucial for economic growth and job creation, making it essential to understand how tax policies affect its performance. Tax administration encompasses procedures and policies governing tax compliance, which have evolved over time. Effective tax administration is vital for economic stability and funding public services. However, inefficient practices can hinder firm productivity and growth. Drawing on tax planning theory and agency theory, this study examines how firms strategically manage tax liabilities and navigate principal-agent relationships to optimize financial performance. The empirical review highlights findings from previous studies on the relationship between tax administration practices and firm performance in Kenya. These studies underscore the importance of tax incentives, compliance costs, and governance mechanisms in shaping firm behavior and economic outcomes. By understanding the nuances of tax administration practices, policymakers and firms can implement strategies to enhance economic stability and growth in the manufacturing sector.

Suggested Citation

  • Dickson Njoroge Wangare, 2024. "Tax Administration and Financial Performance of Manufacturing Firms in Kenya: A literature Review," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 4(4).
    • Handle: RePEc:cwk:ajocsk:2024-23
    DOI: 10.59413/ajocs/v4.i4.2
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    References listed on IDEAS

    as
    1. Fama, Eugene F & Jensen, Michael C, 1983. "Agency Problems and Residual Claims," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 327-349, June.
    2. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    3. Anna Chileshe Nondo & Lubinda Haabazoka, 2024. "A Study of the Factors Affecting Rental Income Tax Administration Effectiveness in Zambia," East African Finance Journal, East African Finance Journal, vol. 3(2).
    4. Era Dabla-Norris & Florian Misch & Duncan Cleary & Munawer Khwaja, 2020. "The quality of tax administration and firm performance: evidence from developing countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(3), pages 514-551, June.
    5. Mihir A Desai & Dhammika Dharmapala, 2009. "Corporate Tax Avoidance and Firm Value," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 537-546, August.
    6. Ross, Stephen A, 1973. "The Economic Theory of Agency: The Principal's Problem," American Economic Review, American Economic Association, vol. 63(2), pages 134-139, May.
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    Cited by:

    1. Anjela Kavetsa, 2025. "Corporate Tax Compliance on the Financial Performance of Manufacturing Companies in Kenya," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 6(2).

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