Taxation and corporate investment: a comparative analysis of Nigeria and Ghana
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Date
2018
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Departments of Accounting & Finance and Business Administration, Fountain University, Osogbo
Abstract
This study examines the effect of taxation on Corporate investment in Nigeria and Ghana using panel data that were obtained from financial statements of listed 150 and 48 companies respectively from 1999-2016. The results showed that all explanatory variables used in this study explained 68.4% and 87.2% variation in investment in Nigeria and Ghana respectively. The F-statistics of 8.79 with p of 0.0000 indicates that the model is fit to predict the investment level. The study concludes that corporate income tax and interest significantly affect the level of investment in Nigeria with each variable having a p-value<5 % and negative coefficients parameters of -0.4065 and -0.1646 respectively. Meanwhile exchange rate and import rate are insignificant in explaining the level of investment in Nigeria, with p-values>5%. However, in Ghana, corporate income tax, interest and exchange rate significantly affect investment given their p-values are <5%. These variables have negative coefficient parameters of -0.6575, -6652 and 0.3010 respectively while import rate with a positive coefficient of 6.9373, also has a p-value of 0.9437 indicating an insignificant relationship with the level of investment in Ghana. The study recommends that governments should restructure tax rate and it’s administration in both countries by reducing the company income tax rate from 30 percent to a lower percentage and enforcing strong macroeconomic policies including stabilization of exchange rate and regulation of interest rate charged by lending institutions with a view to reduce the adverse effect of tax rate on corporate investment
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Keywords
Taxation, corporate investment, exchange rate
Citation
Taxation and corporate investment: a comparative analysis of Nigeria and Ghana. Osogbo Journal of Management. 3 (2); 13 – 25,