TAX SAVING AND MARKET VALUE OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA
Abstract
This study investigates the relationship between tax savings, research and development expenditures, and the market value of quoted deposit money banks in Nigeria. The research specifically examines how tax optimization strategies and innovation-related investments influence share prices, using a sample of sixteen banks over a period of 2012-2023. The study adopts an ex-post facto design, employing secondary data extracted from the annual reports and audited financial statements of the sampled banks. The analytical framework comprises panel unit root tests to assess stationarity, panel regression models including pooled, fixed, and random effects, model selection tests such as the Hausman and Lagrange Multiplier tests, panel cointegration tests, and panel Autoregressive Distributed Lag /error correction models to capture both short-run dynamics and long-run equilibrium relationships. Findings reveal that both tax savings and Research and Development expenditures have significant positive effects on the market value of banks, with firm size also exerting a strong influence on share price. The long-run Autoregressive Distributed Lag results indicate that tax savings increase share price by 0.845 units, while Research and Development expenditures increase it by 0.512 units, with deviations from equilibrium corrected at a rate of 62.2% annually. These results confirm that tax efficiency and innovation investment are critical determinants of shareholder value in the Nigerian banking sector. The study recommends that banks implement structured tax planning and strategic Research and Development investment frameworks, while regulators encourage transparent disclosure to enhance market confidence and long-term value creation.
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Firozpur Jhirka, Haryana, India
