Corporate Tax Optimization Strategies and Financial Distress of Listed Healthcare Firms in Nigeria

This study examined the effect of corporate tax optimisation strategies on the financial health of listed healthcare firms in Nigeria using financial distress measured by the Altman Z-score. The study employed an ex-post facto research design based on balanced panel data comprising 75 firm-year observations drawn from five healthcare firms listed on the Nigerian Exchange Group over the period 2010–2024. Secondary data were obtained from audited annual reports and relevant financial publications. Panel regression analysis was conducted and the fixed-effects model was selected based on the Hausman specification test. Driscoll–Kraay standard errors were applied to improve robustness against heteroskedasticity and cross-sectional dependence. The findings indicate that the effective tax rate exerts a positive but statistically insignificant effect on the Altman Z-score, suggesting that tax burden does not significantly influence firms' financial health. Thin capitalization exhibits a significant negative effect on the Altman Z-score, implying that excessive reliance on debt financing increases financial distress. Similarly, capital intensity has a significant negative effect on the Altman Z-score, indicating that excessive investment in fixed assets without commensurate returns weakens firms' financial health. Tax shields and depreciation tax shields display negative but statistically insignificant effects on financial distress. Firm size positively and significantly influences the Altman Z-score, suggesting that larger healthcare firms are more financially resilient and less vulnerable to financial distress than smaller firms. The study contributes to the literature by providing sector-specific evidence that financing and asset structure decisions exert greater influence on financial distress than conventional tax-planning measures within the Nigerian healthcare industry. The study concludes that sustainable capital structure and efficient asset utilisation are more critical for maintaining corporate financial stability than aggressive tax optimisation strategies. Accordingly, managers should maintain prudent leverage levels, improve asset utilisation efficiency, and adopt balanced tax planning strategies that support long-term financial sustainability.