TAX PLANNING AND PORTFOLIO INVESTMENT DECISION OF LISTED MANUFACTURING COMPANIES IN NIGERIA

Abstract

In attempting to overcome future uncertainties, investment decision making is associated with prejudices which may boost or hamper investment performance. A viable investment requires substantial amount of capital which need to be diversified to minimize its associated risks, but companies and their investors hardly consider tax implication there on. The objective of this study is to examine the effect of tax planning on portfolio investment decision of listed manufacturing companies in Nigeria. The study adopted expost-facto research design; the investigated population is all 54 manufacturing companies listed in the Nigeria Stock exchange market as at 31^st December, 2020. A sample of 27 companies representing 50% of the population was selected using both purposive and quota sampling techniques. Data was collected from the financial statements of listed companies and analyzed through multiple regression. It was discovered that tax planning significantly affect portfolio investment decision in listed manufacturing companies in Nigeria (Adj.R² = 0.4980, Wald-Stat = 335.66, p ˂ 0.05) and financial leverage has significant moderating effect on the effect of tax planning on portfolio investment decision in listed manufacturing companies in Nigeria (Adj.R² = 0.4979, Wald-Stat = 331.12, p ˂ 0.05). The study recommended that while taking portfolio investment decision in listed manufacturing companies in Nigeria, investors and management of the listed firms should consider tax savings, deferred tax and tax shield because they are significant determinants. Also, Investors through expert advice should consider tax planning potentials of various firms before taking portfolio investment decision.