State Capacity, Political Institutions, and Corporate Tax Governance: A Comparative Analysis of Institutional Determinants of Corporate Tax Compliance in Emerging Economies

Corporate tax compliance remained a major governance challenge in many emerging economies, where weak institutional structures facilitated tax avoidance, regulatory capture, and illicit financial flows. This study examined the relationship between political institutions, state capacity, and corporate tax compliance in selected emerging African economies, Nigeria, Ghana, Kenya, and South Africa, over the period 2002–2023. Drawing on Institutional Theory and the Political Economy of Taxation, the study adopted a comparative political economy approach and employed panel regression techniques, including Pooled Ordinary Least Squares (OLS), Fixed Effects (FE), and Random Effects (RE) models. Data were obtained from internationally recognised sources, including the World Bank Worldwide Governance Indicators, Transparency International Corruption Perceptions Index, World Development Indicators, and the International Monetary Fund (IMF) Government Finance Statistics. The findings showed that political institutions, the principal empirical proxy for state capacity in this study, had a positive and statistically significant effect on corporate tax compliance, while corruption negatively affected compliance outcomes. The results further indicated that economic development strengthened fiscal capacity and improved corporate tax governance, whereas trade openness contributed positively to tax compliance within supportive institutional environments. In addition, the Hausman specification test confirmed the suitability of the Fixed Effects model, underscoring the importance of country-specific institutional characteristics in explaining variations in corporate tax compliance. The study concluded that state capacity, as reflected in effective political institutions and institutional effectiveness, constituted a fundamental determinant of corporate tax compliance and fiscal governance in emerging economies. It therefore recommended reforms to strengthen bureaucratic professionalism, enhance regulatory autonomy, improve enforcement mechanisms, reduce corruption, and reinforce institutional capacity for effective tax administration. The study contributed to comparative politics and political economy scholarship by providing empirical evidence on the institutional foundations of corporate tax governance and demonstrating how state capacity, operationalised primarily through the Political Institutions Index, influenced corporate tax compliance across emerging economies.