Audit Firms’ Attributes and Tax Avoidance in Nigeria - Fatai Adisa Adedeji

This study investigates the relationship between audit firm attributes and corporate tax avoidance among listed non-financial firms in Nigeria from 2015 to 2023. Grounded in Agency Theory, Political Cost Theory, and Legitimacy Theory, the research examines how audit firm size, tenure, independence, and industry specialization influence firms’ tax behaviours. Using panel data analysis and drawing on financial statements from 50 purposively selected firms, the study proxies tax avoidance with the effective tax rate (ETR) and applies fixed effects regression to assess the hypothesized relationships. Findings reveal that audit firm size and industry specialization are significantly and negatively associated with tax avoidance, indicating that reputable and specialized auditors help mitigate aggressive tax planning. Conversely, a significant positive relationship is found between audit independence; measured by the ratio of non-audit to total fees; and tax avoidance, suggesting that economic bonding may compromise auditor objectivity. Audit tenure, while positively related to tax avoidance, does not show statistical significance. The study contributes to the literature on audit quality and tax transparency in emerging markets by providing localized empirical evidence. It recommends stricter oversight of non-audit services, promotion of industry expertise, and reforms to audit rotation policies to enhance audit effectiveness in curbing tax avoidance. These insights offer practical implications for regulators, audit practitioners, and corporate stakeholders seeking to strengthen financial integrity and tax compliance in Nigeria.

Audit firm attributes, tax avoidance, audit quality, auditor independence, Big 4, Nigeria, effective tax rate, corporate governance

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