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Effects of tax sheltering on earnings management in Nigeria

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  • Ifeanyi Francis Osegbue

    (Chukwuemeka Odumegwu Ojukwu University, Nigeria)

  • Austin Nweze

    (Enugu State University of Science and Technology, Nigeria)

  • Meshack Ifurueze

    (Chukwuemeka Odumegwu Ojukwu University, Nigeria)

  • Chizoba Mary Nwoye

    (Chukwuemeka Odumegwu Ojukwu University, Nigeria)

Abstract

This study examines how tax sheltering and its interactions with cash effective tax rate, long-term effective tax rate, tax savings, book tax gap, temporary difference of tax shelter and permanent difference of tax shelter impacted the modified Jones earnings model (earnings quality manage-ment) from 2009 to 2016. The study used a sample of all 116 listed companies on the Nigerian stock exchange ranging from all sectors excluding financial services sector due to its reporting system. We concluded that the cash effective tax rate, long term effective tax rate, tax savings temporary and permanent tax difference are insignificant meaning that stakeholders in Nigeria are interested in companies that produce quality financial reports, which clearly shows that there is high earnings manipulation among Nigeria quoted companies as most firms manipulate earnings through abnormal accruals.

Suggested Citation

  • Ifeanyi Francis Osegbue & Austin Nweze & Meshack Ifurueze & Chizoba Mary Nwoye, 2018. "Effects of tax sheltering on earnings management in Nigeria," Research Papers in Economics and Finance, Poznań University of Economics and Business, vol. 3(2), pages 45-69, August.
    • Handle: RePEc:jbl:ref000:v:3:y:2018:i:2:id:79
    DOI: 10.18559/ref.2018.2.5
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