Capital Structure, Corporate Tax Avoidance, and Firm Performance: A Study of Firms in the Manufacturing Sector Listed on the Nigeria Stock Exchange

This thesis explores the complex relationships between capital structure, tax strategies and corporate performance within Nigerian non-financial firms, set against the backdrop of market volatility and shifting regulatory landscapes. Through a sophisticated three-model analytical framework grounded in established theoretical paradigms, the research offers compelling insights into how financing decisions influence organisational outcomes.

The first model reveals that debt-to-equity ratios significantly predict earnings per share and Tobin's Q when examined in isolation, though only the latter remains significant when control variables enter the equation. The second model demonstrates that both the term structure of debt and effective tax rates serve as robust predictors of capital structure and firm valuation. The third model uncovers that tax rates meaningfully moderate several performance indicators without controls, but this effect largely disappears when controls are introduced, with return on assets being the notable exception.

These findings suggest that whilst capital structure decisions substantially influence firm performance, the moderating effect of tax avoidance strategies varies considerably across different metrics. The research emphasises the critical importance of market timing in optimising financing decisions to enhance returns and valuation.

The work makes a valuable contribution to our understanding of corporate finance dynamics in emerging economies. It highlights how firms must skilfully navigate financing alternatives, market conditions and tax considerations to optimise performance and competitive positioning. For practitioners, the research underscores the strategic significance of capital structure decisions; for policymakers, it illuminates how corporate tax frameworks influence business outcomes; and for scholars, it extends theoretical frameworks into the unique context of developing markets.