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1.1             Backgroundto the study            Overthe last decade, the study of tax aggressiveness has been subject of debate andthoughts among researchers and regulators in world. Particularly, managersattach great importance of achieving their organizational goals through the implementationof tax aggressive activities (Desai & Dharmapala, 2006).

Essentially, taxaggressiveness is a plan or arrangement established for the sole purpose ofavoiding tax (Braithwaite, 2005). And by implication, this leads to significantcosts and benefits for management, and a reduction in cash flows available tothe company and shareholders. From an agency theory, the marginal benefits oftax aggressiveness to shareholders include greater tax savings for the corporation,whereas the marginal costs include the potential for tax fines and penalties tobe imposed by the tax administration, implementation costs, reputational costs,and political costs (Scholes, Wolfson, Erickson, Maydew & Shevlin, 2005;Slemrod 2004).

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According to Boussaidi and Hamed, (2015) tax aggressive strategyis deployed by managers to maximize income after all company’s liabilities owedto the state and other stakeholders.            However,it has been reported that the tax aggressiveness does not take into account thepotential non-tax costs that can accompany it, and particularly those arisingfrom agency problems (Scholes et al.,2005). In particular, it is admitted that tax aggressiveness is not only thereduction of the tax due. The implementation of such strategy to reduce the taxbase allows the generation of high potential non-tax cost that arises fromagency conflicts or tax-authority, such as penalties and rent extraction. Forthat, tax aggressiveness is a very specific range of activities because it isalways being surrounded by joint economics transactions which are majorlyorganized by the top managers basically to reduce the corporate tax income andconsequently increase the net income (Chen, Chen, Cheng and Shevlin, 2010). Thisis further substantiated by Desai and Dharmapala (2006), that tax aggressiveactivities are characterized by complexity and obfuscation, which is practicallydifficult to detect.  Essentially, taxaggressiveness represents different tax handling strategies to lower taxableincome that can be legal or illegal.

Companies’ tax aggressiveness can be describedin two ways which include determining what kinds of transactions are favourableunder the law (legal tax avoidance) and tax sheltering (Yeung 2010).            Globally,management actions designed solely to reduce taxes by setting up tax-aggressiveactivities are becoming more common in all companies. And Lanis and Richardson(2011) found that taxes are a factor of motivation for many decisions made bymanagers. In recent times, it has also been established empirically that thetaxes have widely been considered as a motivating factor in many corporations’ decisions.

(Lanis & Richardson 2011; Hanlon & Slemrod 2009; Landolf 2006). It isincreasingly being expected of corporations that they demonstrate to investorsthat they are complying with tax rules and regulations, because investors areaware that tax aggressiveness has a detrimental effect on their investmentreturns (Henderson Global Investors 2005).            Accordingto Uzun, Szewczyk and Varma (2004), the structure of the board of directors hasan important role to play in monitoring management and governance mechanisms. Morerecently, Lanis & Richardson (2011) show that the inclusion of a higherproportion of outside members on the board of directors reduces the likelihoodof tax aggressiveness. In fact, the board of directors bears the ultimateresponsibility for the tax affairs of the corporation, and is held accountablefor them by shareholders and other stakeholders (Erle 2008; Hartnett 2008).Landolf (2006) argues that as the risks faced in tax matters have become more varied,the board of directors must, within the framework of the risk managementstrategy of the corporation as a whole, involve itself directly in thecorporation’s tax planning. In other words, studies have shown that theappointment of female directors is likely to enhance board independence andimprove the shareholders’ wealth (Zalata, Tauringana and Tingbani, 2017).

Otherstrand of literature stressed that the appointment of female directorsfacilitates more informed decisions, enhances the decision-making process, andimproves communication among board members (Bear, Rahman, & Post, 2010;Daily & Dalton, 2003). In addition, the appointment of female directorsenhances the depth and breadth of discussion and deliberations, particularlythose related to challenging issues (Huse & Solberg, 2006; Srinidhi, Gul,& Tsui, 2011; Stephenson, 2004).            Womenplay an important role in tax matters (Kastlunger et al. 2010; and Fallan, 1999). The authors opined that althoughoptimizing tax is a legal activity that aims to minimize the tax burdencompanies taking advantage of the legal and tax advantages granted by theState, the interpretations of situations and tax regulations differ dependingon the masculine and feminine characteristics. Thus, female presence on theboard of directors could significantly reduce the likelihood of taxaggressiveness.

Given that women are generally more cautious and less motivatedto bear excessive risks, the gender of the firms’ directors has been suggestedto affect corporate polices and outcomes. (Arun, Almahrog, and Aribi, 2015;Srinidhi et al, 2011; Adams, andFerreira, 2009) indicate that firms with female directors have lower earningsmanagement.            Regardingpresence of women on the board, Adams & Ferreira (2009) suggest that theirpresence is likely to contribute to improved monitoring. Moreover, by examiningthe monitoring intensity of women with respect to retention decisions andcompensation contracts, Adams & Ferreira (2009) demonstrate that women arestricter monitors than their male counterparts. Also, scholars have suggestedthat gender diversity facilitates effective monitoring by broadening expertise,experience, interests, perspectives and creativity (Erhardt, Werbel, &Shrader, 2003; van Knippenberg, van Ginkel, & Barkema, 2012).             Accordingto Oyeleke, Erin and Emeni, (2016), the interaction of board size with femaledirectors is significantly associated with the reduced level of taxaggressiveness. The results are consistent with the ‘women risk aversion’theory which stipulates that the different attitude of females to excessiverisks can project upon corporate policies and decisions. However, the lowrepresentation of women in executive positions and on the board limits how theirinfluence is perceived.

Similarly, it has been suggested in empiricalliteratures that female representation on a firm’s board of directors improvesthe board’s functioning and efficiency (e.g., Adams & Ferreira, 2009;Fondas & Sassalos, 2000; Hillman, Shropshire, & Cannella, 2007). one of the greatest problems facing            InNigeria, one of the banes of Nigerian Tax System is the problem of tax evasionand tax avoidance (Adebisi and Gbegi, 2013). These menace has created a great gapbetween actual and potential revenue for companies and tax authorities alike. Againstthis background, this study intends to female directorship and taxaggressiveness of listed firms in Nigeria. 1.

2       Statement of the problem             TheNigerian government has implemented various tax reforms to increase tax revenueover the years, despite this, statistical evidence has shown that thecontribution of company’s taxes remained relatively low (Alabede, Ariffin andIdris, 2011). Company taxes have remained relatively low, inefficient and problematicin Nigerian tax system (Asada, 2005; Kiabel & Nwokah, 2009; Nzotta, 2007;Odusola, 2006; Sani, 2005). Evidence indicates that tax aggressiveness may notnecessarily increase corporate value (Khurana & Moser, 2013). Empiricalevidence that links tax aggressiveness and corporate value is mixed (Abdul Wahab& Holland 2012; Desai & Dharmapala, 2009). Uncertainties surroundingtax aggressiveness and corporate value lead to the question regarding the roleof corporate governance in influencing tax aggressiveness. Ariff and Hashim(2014) cite two perspectives that involve the role of corporate governance intax-management activities.

The first perspective is that tax is a ‘boardroomissue’ because it requires a well-developed strategy to balance lowering tax toimprove the bottom-line performance of firms and secondly, that corporategovernance satisfies the firms’ responsibility as good corporate citizens.            Studyon board gender diversity by Betz, Lenahan and Shephard (1989) find that femaledirectors are more risk-averse compared to male directors in regards tocorporate reporting and financial matters. Similarly, Peni and Vähämaa (2010)find that firms with female directors adopt a more conservative, risk-aversefinancial reporting style compared to firms with male directors. McLeod-Hemingway(2007) find that women are likely to contribute positively to the generalfunctioning and deliberations of the board by enhancing the degree oftrustworthiness of the board to the firm’s various stakeholders. According to Adamsand Ferreira (2009); Srinidhi et al.(2011), gender-diverse boards of US firms were broadly tougher monitors, withgender composition of the board being positively associated with boardeffectiveness. Higher female participation on the board through more effectivemonitoring is likely to reduce tax aggressiveness in the same manner as thatachieved with outside directors.            Astrand of literatures has examined the importance of gender diversity in risk-takingand competitiveness of firms (Croson and Gneezy 2009; Charness and Gneezy 2012;Gneezy, Niederle and Rustichini, 2003; Gneezy and Rustichini 2004; Niederle andVesterlund, 2007).

This is further substantiated by other studies that even atthe top of corporate ladders, women significantly differ from men, and thesedifferences may translate into different corporate policies and financialreturns (Faccio, Marchica and Mura, 2016; Huangand and Kisgen 2013; Tate andYang 2015).            InNigeria, there are sparse studies on tax aggressiveness, tax avoidance or taxevasion and revenue in Nigeria (Onyeka, Nnenna and Carol, 2016; Adebisi andGbegi, 2013; Alabede, Ariffin and Idris, 2011). However, Oyeleke, Erin andEmeni, (2016) examined the relationship between the board of directors’ genderdiversity and tax aggressiveness of banks listed on the Nigerian Stock Exchange(NSE). Firstly, there is a dearth of study in this area.

Similarly, the study differsfrom previous known studies, by examining female directorship and taxaggressiveness of listed firms in Nigeria. Hence, this study differs by notconsidering the banking sector, but how female directorship influence taxaggressiveness in listed insurance firms in Nigeria. 1.3       ResearchQuestions The research addresses the followingquestions:i.          what is the pattern of taxaggressiveness in Nigeria?ii.

         to what extent does women on board affecttax aggressiveness of listed firms in     Nigeria?iii.        what is the relationship between female directorshipand firms’ profitability?iv.        does the interaction of femaledirectorship and tax aggressiveness influence the board size?    1.4       Objectivesof the Study             The broad objective of the study isto investigate the relationship between female directorship and taxaggressiveness of listed firms in Nigeria. Hence, the specific objectives areas follows:i.          critically appraise tax aggressivenessin Nigeria.

ii.         analyse the relationship between womenon board and tax aggressiveness of listed firms in             Nigeria;iii.        investigate the effect of femaledirectorship on tax aggressiveness of listed firms.

iv.        determine the interactive effect offemale directorship and tax aggressiveness on board size1.5       Research hypothesesThe hypotheses to be tested in the courseof this study are stated below:HypothesisI:H1:       There is a relationship between woman on board and taxaggressiveness of listed firms in Nigeria.HypothesisII:H1:       femaledirectorship affects tax aggressiveness of listed firms in Nigeria.HypothesisIII:H1:       Theinteraction between female directorship and tax aggressiveness influencerelative board size. 1.6       Significanceof the Study            Thisstudy will contribute to literature in diverse ways, it study adds to thefrontier of knowledge on female directorship and tax aggressiveness in listedfirms in Nigeria. This is necessary to consider whether prior findings can beobserved in another environment different in respect of culture, tax policies andgovernance efficiency.

It will help firms to understand the significance offemale board members of the tax aggressiveness policy adopted.Similarly, the study is also important totax policy makers since tax aggressiveness could possibly lead to tax evasionthat is detrimental to a country’s revenue base and its public spending. Thestudy also improves awareness of the users of financial statement and taxcollection bodies on the extent of tax aggressiveness by which huge amounts maybe lost.This study would be of benefit to across-section of stakeholders like government, revenue officials, students,lecturers, researchers and accounting professionals.             Also,the study would provide information to policy makers in order to enable themmake better decisions and come up with better reforms for the tax system of thecountry. This research would be of immense benefit to lecturers, researchers inresearch institutions, students and consultants.

For this group of people,informative materials in certain areas would enhance their research. Thisresearch, would add to the body of knowledge that will assist researchers inenhancing their work/researches, the areas in which this study has not coveredcould be a starting point or suggestion for further research.1.7       Scopeof the Study Thestudy investigates the effect of female directorship on tax aggressiveness of listedinsurance firms in Nigeria. In order to evaluate this impact, the study isconducted for the period of eight years that is from 2010 to 2015.

The studyperiod emerges from the fact that there were tax reforms during the period. Thestudy focused on the insurance sector, to help establish if the findings infinancial sector (banking) is also obtainable in the non-financial sector(insurance). 

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