Relationship Between Corporate Tax Aggressiveness and the Value of Manufacturing Firms Listed at the Nairobi Securities Exchange in Kenya

Abstract

The study sought to establish the effect of corporate tax aggressiveness on the value of manufacturing firms listed at the Nairobi securities exchange in Kenya. The study was informed by the agency theory and the stewardship theory. The study was conducted among 10 listed manufacturing firms in Kenya with adoption of descriptive survey. Census was adopted and information was gathered from secondary sources on a period from 2019 to 2023 hence a period of 5 years. The analysis of the gathered data was aided by SPSS as a tool through means and standard deviations as well as regression analysis. Diagnostic tests were conducted prior to regression analysis and it aimed at testing and validating its assumptions. The findings were presented through tables. The study established that corporate tax aggressiveness (β=0.583, p<0.05), leverage (β=0.469, p<0.05) and profitability (β=0.777, p<0.05) were all significant predictors of firm value of the manufacturing listed entities in Kenya. It was concluded that corporate tax aggressiveness was a significant predictor of firm value when leverage and profitability is controlled for. The study recommends that finance managers working with listed manufacturing firms in Kenya should leverage their corporate tax aggressiveness to generate cash flows that can be efficiently and effectively utilized to finance investment projects for generation of returns to sustain their operations. It is also recommended that finance managers working with these firms should effectively utilize debts in their capital structures to invest in viable projects that can generate returns hence improving their values.