Abstract
This study examines the relationship between earnings management and corporate tax aggressiveness among listed non-financial firms in Nigeria, with a specific focus on the moderating role of audit committee independence. Using a panel dataset of 85 firms listed on the Nigerian Exchange Group (NGX) from 2012 to 2025, we employ fixed-effects regression and moderated regression analysis. Earnings management is measured using discretionary accruals estimated via the modified Jones model, while tax aggressiveness is proxied by the book-tax difference and the cash effective tax rate. Audit committee independence is measured as the proportion of independent non-executive directors on the audit committee. The results reveal a positive and statistically significant relationship between earnings management and tax aggressiveness, indicating that firms engaging in earnings manipulation also pursue aggressive tax strategies. More importantly, audit committee independence significantly moderates this relationship, attenuating the positive association between earnings management and tax aggressiveness. This moderating effect is robust to alternative measures of earnings management and to subsample analyses. The findings suggest that independent audit committees serve as effective governance mechanisms that constrain opportunistic managerial behaviour in both financial reporting and tax planning. The study contributes to agency theory and corporate governance literature by highlighting the dual monitoring role of audit committees in emerging markets. Practical implications for regulators, boards of directors, and investors in Nigeria and similar institutional contexts are discussed.
Keywords
Earnings management, tax aggressiveness, audit committee independence, corporate governance, Nigeria, discretionary accruals, effective tax rate, moderation