Taxation and Corporate Performance: Analyzing the Effective Tax Rate, Marginal Tax Rate and Earnings Per Share (EPS) of Listed Industrial Goods Companies in Nigeria

Abstract

This study evaluates the impact of the effective tax rate (ETR) on the earnings per share (EPS) of listed industrial goods companies in Nigeria from 2019 to 2023. Using a population of thirteen listed industrial companies, the study draws data from firm accounts and annual reports. Panel data analysis, including descriptive statistics, correlation analysis, and panel multiple regression were employed to examine the relationship between the independent variables—effective and marginal tax rates—and the dependent variable, net income after taxes and interest, adjusted for the total number of outstanding common shares. The findings reveal that the effective tax rate significantly reduces earnings per share among Nigerian listed industrial companies. The study recommends that these companies adopt legitimate tax planning strategies, such as utilizing tax incentives, optimizing transaction structures, and effectively managing tax risks, to enhance their earnings per share and overall financial performance. These findings have significant implications for corporate management and regulatory bodies in designing tax policies that support industrial growth and shareholder value.