EARNINGS MANAGEMENT AND CORPORATE TAX: A STUDY OF LISTED MANUFACTURING COMPANIES IN NIGERIA

Abstract

This study examines the relationship between earnings management and corporate tax in Nigeria, focusing on how firms manipulate financial reports to influence tax obligations. The research aims to assess the extent to which earnings management practices impact corporate tax liabilities and whether regulatory frameworks effectively mitigate such practices. A quantitative research design was employed, utilizing secondary data from audited financial statements of selected listed companies in Nigeria. The sample consists of firms spanning various sectors, chosen based on availability and relevance to the study. Data were analyzed using regression analysis to establish correlations between earnings management indicators and corporate tax payments. The findings indicate a significant relationship between earnings management and corporate tax, with firms engaging in income smoothing and profit shifting to minimize tax burdens. The study also reveals that weak enforcement of tax regulations contributes to the persistence of these practices. In conclusion, the research underscores the need for stricter regulatory oversight and transparent financial reporting to curb earnings manipulation. It recommends that tax authorities enhance compliance monitoring while firms adopt ethical accounting practices to ensure corporate tax contributions align with actual earnings.