Impact of Tax Planning Activities on the Financial Performance of Listed Firms on the Ghana Stock Exchange

Abstract

ABSTRACT This dissertation was aimed at assessing the impact of tax planning activities on firms’ performance among the listed firms on the GSE. It also examined the effects of demographic characters; board size and non-executive membership impose on tax planning of firms. By employing a pooled panel regression on a panel data set of listed companies on the Ghana Stock Exchange over the period of 2010 to 2019, the study found that the size of firm and the stage of growth along its life cycle do have a positive and significant impact on its tax planning activities. In addition, the size and composition of the board of directors also significantly affects a firm’s tax planning decisions and activities. Large boards are adversarial while the presence of non-executive directors enhances tax planning. Finally, tax planning was observed to be negative and significant to firm performance. Based on the findings of the study, it is worthwhile that companies engage in periodic analysis to assess their growth trajectory in order to select and implement appropriate tax planning activities that commensurate their growth stage. Furthermore, shareholders should consider the inclusion of non-executive directors on the board even as they strive to maintain a reasonable board size. Finally, management should engage on cost and benefit analysis on tax planning in order to select and implement a feasible strategy to leverage for firm performance.