Stock Options, Long-Term Incentives Plan and Tax Avoidance of Listed Multinational Corporations in Nigeria

Tax avoidance among multinational corporations in Nigeria remains a critical issue due to persistent challenges such as aggressive tax planning, equity-based executive incentives, and limited regulatory oversight. This study examines the relationship between Stock Options (SO) and Long-Term Incentive Plans (LTIP) on tax avoidance in Nigerian-listed multinational corporations. Using panel data from 31 multinational corporations listed on the Nigerian Exchange Group, spanning from 2010 to 2024, this study employs Panel EGLS with cross-section weights using E-Views 12 statistical software. The findings reveal that Stock Options (SO) have a negative but significant effect on tax avoidance, indicating that higher option-based pay incentivizes tax avoidance, while Long-Term Incentive Plans (LTIP) have a positive but insignificant effect, suggesting no meaningful influence on tax planning. The study recommends that Nigerian regulatory authorities, particularly the SEC and FRCN, should mandate enhanced annual disclosures of stock option grants and exercise details while requiring listed multinational corporations to link a meaningful portion of LTIP vesting to verifiable tax compliance and minimum effective tax rate thresholds, with clawback provisions for non-compliance, to curb incentive-driven tax avoidance without compromising long-term alignment.

Stock Option, Long-Term Incentives Plan, Tax avoidance, Effective Tax Rate

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