ArticlePDF Available

DO GOVERNMENT TAXES HAVE IMPLICATIONS ON MANUFACTURING SECTOR OUTPUT? EVIDENCE FROM NIGERIA

Authors:
Article

DO GOVERNMENT TAXES HAVE IMPLICATIONS ON MANUFACTURING SECTOR OUTPUT? EVIDENCE FROM NIGERIA

Abstract

Background: The implications of taxes on output have generated different debates and controversial issues among scholars, most especially in developing economies. Objectives: Hence, the short and long-run impact of taxes on output in the manufacturing sector is examined in Nigeria. Method: To achieve these objectives, the study investigates the effect of company income and value-added taxes on the output of the manufacturing sector in Nigeria using Auto-Regressive Distributed Lags. Results: The long-run result revealed that there is a positive relationship between corporate taxes and the output of the manufacturing sector, while value-added tax reveals a negative relationship with the output. Evidence from the short-run result shows that company income tax is not statistically significant at the level of 5 per cent confirming the Ricardian Equivalence, although, the value-added tax is observed to be positively related to the output of the manufacturing sector. Conclusion: The implications of the result revealed that fiscal measures via taxation and expenditure have not enhanced the productive capacity of the manufacturing sector in Nigeria.
Journal of Management Information and Decision Sciences Volume 22, Issue 3, 2019
181 1532-5806-22-3-141
Citation Information: Oladipo, O.A., Iyoha, O.F., Fakile, A.S., Asaleye, A.J., & Eluyela, D.F. (2019). Do government taxes have
implications on manufacturing sector output? Evidence from Nigeria. Journal of Management Information and
Decision Sciences, 22(3), 181-190.
DO GOVERNMENT TAXES HAVE IMPLICATIONS ON
MANUFACTURING SECTOR OUTPUT? EVIDENCE
FROM NIGERIA
Olufemi Adebayo Oladipo, Landmark University
Odianonsen Francis Iyoha, Covenant University
Adeniran Samuel Fakile, Landmark University
Abiola John Asaleye, Landmark University
Damilola Felix Eluyela, Landmark University
ABSTRACT
Background: The implications of taxes on output have generated different debates and
controversial issues among scholars, most especially in developing economies.
Objectives: Hence, the short and long-run impact of taxes on output in the manufacturing
sector is examined in Nigeria.
Method: To achieve these objectives, the study investigates the effect of company income
and value-added taxes on the output of the manufacturing sector in Nigeria using Auto-
Regressive Distributed Lags.
Results: The long-run result revealed that there is a positive relationship between
corporate taxes and the output of the manufacturing sector, while value-added tax reveals a
negative relationship with the output. Evidence from the short-run result shows that company
income tax is not statistically significant at the level of 5 per cent confirming the Ricardian
Equivalence, although, the value-added tax is observed to be positively related to the output of
the manufacturing sector.
Conclusion: The implications of the result revealed that fiscal measures via taxation and
expenditure have not enhanced the productive capacity of the manufacturing sector in Nigeria.
Keywords: Tax; Output; Manufacturing Sector
INTRODUCTION
Increases in the growth rate of population and low standard of living have propelled
government spending in developing economies over the years. However, the implications of
taxes on output have generated different debates and controversial issues among scholars (Barro,
1974; Chen et al., 2017; Huang & Frentz, 2014; Moutford & Uhlig, 2009; Perott, 2005; Popoola
et al., 2018). Although, tax proceeds are one of the vital instruments for economic improvement
in many developing nations like Nigeria since the internally generated revenue through taxes
assists the government in providing funds for the provision of infrastructures and social
amenities (Akintoye & Tashie, 2013; Eluyela et al., 2018a). Abata (2014) opined that taxation
encompasses the allocation of funds from the private sector to the community for the creation of
social goods which will improve economic and social goals. Therefore, the tax revenue can be
considered to be the utmost controlling charges accessible or reliable sources of revenue
available to the government in order to stabilize and promote its economic and social
improvement. In recent times, the Nigerian government has stressed the importance of
Journal of Management Information and Decision Sciences Volume 22, Issue 3, 2019
182 1532-5806-22-3-141
Citation Information: Oladipo, O.A., Iyoha, O.F., Fakile, A.S., Asaleye, A.J., & Eluyela, D.F. (2019). Do government taxes have
implications on manufacturing sector output? Evidence from Nigeria. Journal of Management Information and
Decision Sciences, 22(3), 181-190.
investment on social goods to propel sustainable growth and development (Obadiaru et al., 2018;
Popoola et al., 2018).
Nevertheless, questions have been raised on the short and long-run implications of taxes
on growth and development. In the short-run, an increase in taxes on consumer goods might have
negative effects on the economy by reducing disposable income and reduce the general welfare
of the citizens. Though, in the long run, the effect could be beneficial if the credits on taxation
are channeled towards productive activities. Likewise, increase on the tax rate on the producer
side tends to discourage investment in terms of capital accumulation and other assets needed to
increase the capacity of the organization which may be detrimental to output in the long-run.
This can be summarized under the concept Ricardian Equivalence”. This concept suggest that a
government cannot stimulate consumers spending since people assume that whatever is gained
now will be offset by higher taxes in the future. This is noted in the work of Barro (1974) who
stressed that tax changes will be insignificant to output. The underlying idea behind this theory is
that no matter how a government chooses to increase spending, whether debt or tax financing,
the outcome is the same and demand remains unchanged. Other empirical views in this line
include the studies by Mountford & Uhlig (2009); Perotti (2005).
Income taxes are vital in revenue generation terms, but both personal and corporate
income tax rates have decreased around the world most especially in developed economies. The
macroeconomic performances in recent times have been a major concern for the Nigerian
government and generating funds to meet the needs of the people in an economy characterized
with high population growth, high dependency ratio and high importation of foreign goods and
low output of manufacturing sector. In addition, the high unemployment rate, poverty rate and
low income are as well some of the macroeconomics pertaining to Nigeria economy (Fashina et
al., 2017; Oloni et al., 2017). Similarly, the performance of the manufacturing sector in the last
decade has been subject to various debates among scholars and policymakers due to its ability to
promote pro-poor growth (Asaleye et al., 2018; Asaleye et al., 2017; Eluyela et al., 2018b).
Moreover, the incessant decrease in the production output of manufacturing companies in
Nigeria and the multiplicity of taxes by the government as means of generating revenue without
equivalent improvement on the infrastructures in the country shift the attention of this study to
investigate the implication of taxes on manufacturing output in Nigeria. Scholars have shown
that tax has short-run and long-run effects on the economy (Abdullah & Morley, 2014; Chen et
al., 2017; Huang & Frentz, 2014; King & Rebelo, 1990). Although, there are recent studies on
the manufacturing sector in Nigeria. For instance, Adefeso (2018) examined the influence of
corporate tax policy on the performance of 54 randomly selected listed companies between
1990-2002. The time series data gathered were analyzed using Generalized Method of Moment
(GMM). The result from the study shows a positive significant relationship between corporate
tax policy and the output performance of quoted manufacturing firms in Nigeria. The study
recommended that federal government should either minimize or totally remove tax incentives,
tax waivers and tax holidays to some manufacturing firms in Nigeria. Peter & Simen (2011)
analyzed the impact of fiscal policy variables on Nigerian economic growth between 1970-2009.
The method of analysis applied were Vector Autoregression (VAR) and Error Correction Model
(ECM). The study concluded that a long run relationship exists between fiscal policy and
economic growth in Nigeria. Subsequently, Tomola et al. (2012) also used Vector
Autoregression (VAR) and co-integration to assess the long run relationship between economic
growth and manufacturing sector in Nigeria. Their findings were consistent with Peter and Simen
(2011). Lastly, Falade & Olagbaju (2015) employed time series data from 1973-2013 to examine
the relationship between government expenditure and manufacturing sector output in Nigeria.
Journal of Management Information and Decision Sciences Volume 22, Issue 3, 2019
183 1532-5806-22-3-141
Citation Information: Oladipo, O.A., Iyoha, O.F., Fakile, A.S., Asaleye, A.J., & Eluyela, D.F. (2019). Do government taxes have
implications on manufacturing sector output? Evidence from Nigeria. Journal of Management Information and
Decision Sciences, 22(3), 181-190.
Using Johansen cointegration method, the study confirms the existence of cointegration amidst
variables at five per cent. However, most of these studies focused on monetary policy, credit
channels and financial development (Asaleye et al., 2018; Asaleye et al., 2018; Uwuigbe et al.,
2018). The methodological gap identified in this study is the lack of empirical evidence
regarding the short and long-run impacts of taxes in manufacturing sector in Nigeria using Auto-
Regressive Distributed Lags. Motivated by this, this study, therefore, used Auto-Regressive
Distributed Lags to examine the short and long-run impacts of taxes on Nigerian manufacturing
output. This study contributed to finance and policy literature as follows: (1) provides the first
empirical evidence on short and long-run impacts of taxes in Manufacturing sector in Nigeria
using Auto-Regressive Distributed Lags, (2) it uses a novel dataset on impact of taxes on
manufacturing sector in Nigeria.
MATERIALS AND METHODS
This study predominantly used secondary data and the data were sourced from CBN
Statistical Bulletin (2017) and Federal Inland Revenue Service, Nigeria from 2000Q1 to 2016Q4
(Eluyela et al., 2019). In analyzing the data gathered autoregressive distributed lag statistical
technique was employed to establish the relationship between dependent and independent
variables. The study made use of Hannan-Quinn to select the appropriate lags used in estimating
the long run relationship between taxes and manufacturing output.
Following the study by Asaleye et al. (2018) with a slight adjustment to achieve the
objective of this study, the functional relationship between taxes and the manufacturing output is
expressed as the dependent and independent variables in the regression analysis are expressed in
their logarithms form as follows:
0 1 2 3tt
POutput CIT VAT MCAUT u
 
 
(1)
In eqn. (1),
POutput
is output in the manufacturing sector,
CIT
is the company income
tax,
VAT
is value added tax and
MCAUT
is manufacturing capacity utilization. Where ‘t’ is the
period of observation,
0
is the constant term and
t
u
is the error term. Applying logs to equation
3.1 becomes;
0 1 2 3
ln ln ln
tt
mo CIT VAT MCAUT
 
 
(2)
In eqn. (2),
mo
is the log of output in the manufacturing sector and
t
is ln (
)
Prior to the estimation of the long-run and short-run behaviour using the Auto-regressive
Distributed Lags (ARDL), the study examined the stationary properties of the series using the
Augmented Dickey-Fuller (ADF) approach. The ADF equation is given as:
1 2 1 1
m
t t i t i t
i
Y t Y Y
 

 
(3)
To determine the unit root property of the series involves estimating eqn. (3), where t, is
the period of observation,
Y
is the time series under examination,
1
and
2
are the intercept and
Journal of Management Information and Decision Sciences Volume 22, Issue 3, 2019
184 1532-5806-22-3-141
Citation Information: Oladipo, O.A., Iyoha, O.F., Fakile, A.S., Asaleye, A.J., & Eluyela, D.F. (2019). Do government taxes have
implications on manufacturing sector output? Evidence from Nigeria. Journal of Management Information and
Decision Sciences, 22(3), 181-190.
slope respectively,
is the drift parameter,
is the first difference operator and
t
is the white
noise error term. The error term is assumed to be uncorrelated and ADF follows an asymptotic
distribution. The critical values are used to determine the level of the stationary process. The null
hypothesis
is equal to zero, indicates that the time series under consideration is non-stationary
and the alternative hypothesis if
is less than zero shows that the time series is stationary.
Based on the outcome of the unit root test, the study proceeds to estimate the long-run
relationship using the ARDL which shows the short-run dynamic behaviour and the long-run
equation. This approach to long-run relationship stressed that irrespective of whether the
underlying series are integrated of order one I (1) or order zero I (0), the approach is the most
suitable (Fashina et al., 1998). The ARDL equation is given as:
12
10
qp
t o o i t i j t j t i t i t
ij
y b c t c y w x y x
 
 

 

(4)
In eqn. (4),
o
b
is the drift coefficient and
o
c
is the trend coefficient, while
t
represents the white
noise error term. The short-run coefficients are
i
c
and
j
w
while the long-run coefficients are
1
and
2
.
Presentation of Data and Results
Stationary Result
Table 1
UNIT ROOT AUGMENTED DICKEY-FULLER TEST (ADF) RESULT
Series
ADF statistics Value at Level
ADF statistics Value at First Diff
Order of Integration
CIT
-0.657714
-9.375307*
I (1)
MCAUT
-2.972956
-10.13075*
I (1)
MO
-1.275155
-10.08031*
I (1)
VAT
-6.036478*
-
I (0)
*The variables are significant at the level of 5 per cent
Source: Authors Computation using Eviews 9.5
Table 1 presents the result of the unit root test of the series using Augmented Dickey-
Fuller. From the result, it was observed that the study cannot reject the null hypothesis of the
presence of unit root for CIT, MCAUT and MO. Since the ADF test statistics is less than the test
critical value at the level of 5 per cent significance. Hence, the series are integrated of order one.
However, the study rejected the null hypothesis of a unit root for VAT.
Auto-Regressive Distributed (ARDL) Result
Table 2
BOUND TEST RESULT ARDL (3, 0, 0, 2)
Significance
Lower Class Bound.
Upper-Class Bound
F-statistics
Decision
10%
2.72
3.77
6.357176
Long-run
5%
3.23
4.35
6.357176
Long-run
2.5%
3.69
4.89
6.357176
Long-run
1%
4.29
5.61
6.357176
Long-run
Source: Authors Computation using Eviews 9.5
Journal of Management Information and Decision Sciences Volume 22, Issue 3, 2019
185 1532-5806-22-3-141
Citation Information: Oladipo, O.A., Iyoha, O.F., Fakile, A.S., Asaleye, A.J., & Eluyela, D.F. (2019). Do government taxes have
implications on manufacturing sector output? Evidence from Nigeria. Journal of Management Information and
Decision Sciences, 22(3), 181-190.
Based on the outcome of the unit root test, this study estimated the ARDL to test for the
existence of a long-run relationship among the series. Table 2 shows the ARDL result using
Output in the manufacturing sector (MO) as the dependent variable, it is depicted that long-run
relationship exists since the F-statistics is greater than the upper-class boundary at levels 10, 5,
2.5 and 1 significance level.
Table 3
ARDL LONG-RUN RELATIONSHIP RESULT
Using MO as the dependent variable
Variable
Coefficient
Std. Error
t-statistics
Prob.
CIT
0.249629
0.050042
4.988397
0.0000
MCAUT
-1.625711
1.876198
-0.0866492
0.4087
VAT
-0.515250
0.190925
-2.698711
0.0244
C
0.021459
0.002960
7.235955
0.0000
F-Statistics: 20.56412
Prob. value: 0.000023
R-squared: 0.990368
Durbin-Watson Statistics Value: 2.077085
Adjusted R-squared: 0.942208
Source: Authors Computation using Eviews 9.5
Table 3 presents the long-run relationship using MO as the dependent variable. The
Durbin-Watson statistics value is 2.077085 which is closer to 2, means no autocorrelation. The
F-statistics measure the joint significance of the variables. The F-statistics value is 20.56412 with
the probability of 0.000023; this indicates that the independent variables jointly explained the
dependent variable at a 5 per cent significance level. The R-squared measures the determination
of coefficient, measuring the fit of the model. The value of the R-squared is 0.990368, this shows
that about 99 per cent variation in the dependent variable is been explained by the variations in
the independent variables. Hence, there is a good fit in the model. Likewise, the adjusted R-
squared measure the goodness of fit with putting the degree of freedom into consideration. The
value is 0.92208, showing that the model has a good fit.
Evidence from the long-run result shows that company income tax (CIT) and value-added
tax (VAT) is statistically significant at the level of 5 per cent; CIT has a positive relationship
with the dependent variable (MO). Holding other variables constant, 1 per cent change in VAT
will result in about 0.24 per cent in MO in the long-run. VAT exerts a negative relationship with
MO, holding other variables constant, 1 per cent change in VAT will cause about 0.51 reductions
in MO in the long-run. Manufacture capacity utilization (MCAUT) is not statistically significant
at the level of 5 per cent.
Table 4
ARDL Short-run Relationship Result
Variable
Coefficient
Std. Error
t-Statistic
Prob
D(MO(-1))
0.746349
0.113974
6.548410
0.0000
D(MO(-2))
0.223869
0.119055
1.880376
0.0653
D(CIT)
-0.023164
0.082945
-0.279272
0.7811
D(MCAUT)
-0.300312
1.777695
-0.168933
0.8665
D(VAT)
4.037651
0.897729
4.497627
0.0000
D(VAT(-1))
3.766565
1.044319
3.606718
0.0007
Coint. Eq.(-1)
-0.025342
0.009433
-2.686566
0.0095
Source: Authors Computation using Eviews 9.5
Table 4 presents the short-run relationship, evidence from the result shows that CIT and
MCAUT are not statistically significant at the level of 5 per cent. The VAT is observed to be
positively related to output in the manufacturing sector.
Journal of Management Information and Decision Sciences Volume 22, Issue 3, 2019
186 1532-5806-22-3-141
Citation Information: Oladipo, O.A., Iyoha, O.F., Fakile, A.S., Asaleye, A.J., & Eluyela, D.F. (2019). Do government taxes have
implications on manufacturing sector output? Evidence from Nigeria. Journal of Management Information and
Decision Sciences, 22(3), 181-190.
Evidence from the short-run relationship as presented in Table 4 shows that CIT and
MCAUT are not statistically significant at the level of 5 per cent. The VAT is observed to be
positively related to output in the manufacturing sector. By implication, holding other variables
constant, one per cent increase in VAT will increase output in the manufacturing sector to about
4.03 per cent and 3.8 per cent in the first-differenced form and one lagged period respectively.
Model Selection Criteria and Diagnostic Checks
10.81
10.82
10.83
10.84
10.85
10.86
10.87
10.88
10.89
ARDL(3, 0, 0, 2)
ARDL(3, 0, 0, 3)
ARDL(2, 0, 0, 2)
ARDL(2, 1, 0, 2)
ARDL(4, 0, 0, 2)
ARDL(3, 1, 0, 2)
ARDL(3, 1, 0, 3)
ARDL(3, 2, 0, 2)
ARDL(2, 2, 0, 2)
ARDL(4, 0, 0, 3)
ARDL(3, 0, 1, 2)
ARDL(3, 0, 0, 4)
ARDL(3, 0, 1, 3)
ARDL(3, 2, 0, 3)
ARDL(2, 1, 0, 3)
ARDL(2, 0, 0, 3)
ARDL(2, 0, 1, 2)
ARDL(2, 1, 1, 2)
ARDL(4, 2, 0, 2)
ARDL(4, 1, 0, 2)
Hannan-Quinn Criteria (top 20 models)
Source: Authors computation using Eviews 9.5
FIGURE 1
MODEL SELECTION CRITERIA
Figure 1 presents the first top twenty models, using 4 lags each for the variables. Hannan-
Quinn was used to select the appropriate lag. As shown from the result, the most appropriate lags
are 3 for MO, 0 for CIT, 0 for MCAUT and 2 VAT since the lags combinations have the lowest
Hannan-Quinn relative of others.
Diagnostic Checks
The diagnostic checks are used to determine if the model is correctly specified, the tests
are presented in Table 5 and Figure 2. For a model to appropriately specified; the residual must
not be serially correlated, normally distributed and must have equal variance (Asaleye et al.,
2017).
Journal of Management Information and Decision Sciences Volume 22, Issue 3, 2019
187 1532-5806-22-3-141
Citation Information: Oladipo, O.A., Iyoha, O.F., Fakile, A.S., Asaleye, A.J., & Eluyela, D.F. (2019). Do government taxes have
implications on manufacturing sector output? Evidence from Nigeria. Journal of Management Information and
Decision Sciences, 22(3), 181-190.
Table 5
SERIAL CORRELATION LM TEST AND HETEROSCEDASTICITY
Breusch-Godfrey Serial Correlation LM Test
F-statistic
0.112760
Prob. F(2, 7)
0.8950
Obs.* R-squared
1.716640
Prob. Chi-Square (2)
0.4239
Heteroskedasticity Test: ARCH
F-statistic
0.015374
Prob. F(2, 50)
0.9847
Obs.* R-squared
0.032571
Prob. Chi-Square (2)
0.9838
Source: Author’s Computation using Eviews 9.5
Table 5 presents the serial correlation LM Test and the Heteroskedasticity Test. The
probability value of the Chi-square for the serial correlation is 0.4239, indicates no serial
correlation in the model. Likewise, the probability chi-square for the ARCH test is 0.9838 shows
that the variance of the error terms is constant.
Normality Test
0
1
2
3
4
5
6
7
8
-0.002 -0.001 0.000 0.001 0.002
Series: Residuals
Sample 2003Q2 2016Q4
Observations 55
Mean 4.41e-18
Median -3.53e-05
Maximum 0.001769
Minimum -0.001813
Std. Dev. 0.000875
Skewness 0.198408
Kurtosis 2.130452
Jarque-Bera 2.093613
Probability 0.351057
FIGURE 2
HISTOGRAM NORMALITY TEST
Figure 2 presents the histogram normality test, the Jarque-Bera statistics is 2.093613 with
a probability value of 0.351057. Since the probability is greater than 5 per cent, this result
indicates that the errors are normally distributed.
Discussion of Findings
This study examines the short and long-run impact of taxes on the output of the
manufacturing sector in Nigeria. Two types of taxes are considered in this study, the company
income tax and the value-added tax. The preliminary test was carried out on the series to
determine the stationary properties. Evidence from the result as presented in Table 1 showed that
all series are integrated of order one except value-added tax which is stationary at level. Based
on the outcome of the series, the study used Autoregressive distributed Lags (ARDL) to examine
the short and long-run impacts of the taxes on the output of the manufacturing sector. Firstly, the
Bound test was used to establish the long-run relationship as presented in Table 2, since the
calculated F-statistics is greater than the upper bounds at the levels of 1 per cent, 2.5 per cent, 5
per cent and 10 per cent. This result indicates that the effect of the change in the short-run on any
of the independent variable will have a long-run impact. Hence, there is a need to examine short
Journal of Management Information and Decision Sciences Volume 22, Issue 3, 2019
188 1532-5806-22-3-141
Citation Information: Oladipo, O.A., Iyoha, O.F., Fakile, A.S., Asaleye, A.J., & Eluyela, D.F. (2019). Do government taxes have
implications on manufacturing sector output? Evidence from Nigeria. Journal of Management Information and
Decision Sciences, 22(3), 181-190.
and long-run impacts. Evidence from the long-run result as presented in Table 3 shows that
company income tax (CIT) and value-added tax (VAT) is statistically significant at the level of 5
per cent; CIT has a positive relationship with the dependent variable (MO). This result is line
with the study of Veronika and Lenka, 2012; Haruyaman and Itaya, 2006 and, Lin and Russon,
1999. VAT exerts a negative relationship with MO, this is in line with the study of King &
Rebelo (1990); Pecorino, 1994. Manufacture capacity utilization (MCAUT) is not statistically
significant at the level of 5 per cent. High unemployment rate and low standard of living has
been major concern in Nigerian economy (Arisukwu et al., 2019; Asaleye et al., 2019; Asaleye et
al., 2019), the manufacturing sector is envisaged to improve the situation.
Evidence from the short-run relationship as presented in Table 4 shows that CIT and
MCAUT are not statistically significant at the level of 5 per cent. The VAT is observed to be
positively related to output in the manufacturing sector. This result is in line with the study of
Chen et al, 2017 who documented that tax has a positive relationship with the growth of
technology and output in the short-run. The implications of the result revealed that fiscal
measures via taxation and expenditure have not enhanced the productive capacity of the
manufacturing sector most especially in the long-run in Nigeria. The model selection and
diagnostic checks were later carried on. Evidence from the model selection shows that this study
used the most appropriate model suggested by Hannan-Quinn. In addition, the result of the
diagnostic checks showed that the model satisfied the following assumptions; the residual must
not be serially correlated, normally distributed and have equal variance.
CONCLUSION
The implications of taxes on output across have generated different debates and
controversial issues in the literature, most especially for developing economies. Likewise,
questions have been raised on the short and long-run implications of taxes on growth and
development. It is assumed that in the short-run, an increase in taxes on consumer goods will
have negative effects on the economy by reducing disposable income and reduce the general
welfare of the citizens. Conversely, in the long-run, the effect could be beneficial if the credits on
the taxation are channeled towards productive activities. Similarly, increase on the tax rate on the
producer side tends to discourage investment in terms of capital accumulation and other assets
needed to increase the capacity of the organization, which may be detrimental to output in the
end.
Moreover, based on the incessant decrease in the production output of manufacturing
companies in Nigeria and the multiplicity of taxes by the government as means of generating
revenue without equivalent improvement on the infrastructures in the country tends this study to
investigate the implication of taxes on manufacturing output in Nigeria using Autoregressive
Distributed Lags to establish the short and long-run behaviour.
This study discovered that in the long-run result shows that company income tax and
value-added taxes are statistically significant at the level of 5 per cent; company income tax has a
positive relationship with the dependent variable (output in the manufacturing sector). Value
added tax exerts a negative relationship with the output. The short-run equation shows that
company income tax and manufacturing capacity utilization are not statistically significant at the
level of 5 per cent confirming the Ricardian Equivalence. Value added tax is observed to be
positively related to output in the manufacturing sector. The implications of the result revealed
that fiscal measures via taxation and expenditure have not enhanced the productive capacity of
Journal of Management Information and Decision Sciences Volume 22, Issue 3, 2019
189 1532-5806-22-3-141
Citation Information: Oladipo, O.A., Iyoha, O.F., Fakile, A.S., Asaleye, A.J., & Eluyela, D.F. (2019). Do government taxes have
implications on manufacturing sector output? Evidence from Nigeria. Journal of Management Information and
Decision Sciences, 22(3), 181-190.
the manufacturing sector in Nigeria. It is believed that this study will help policymakers and
scholars to understand the implications of taxes on output in respect to period perspectives (short
and long run), most especially in the manufacturing sector which has remained under-researched
in developing economies.
Based on the findings, the study recommended that: government should increase its
expenditure on infrastructural development to improve manufacturing capacity utilization rate
and encourage huge investments in the country, as this will have a multiplier effect on
manufacturing activities and enhance economic growth in Nigeria. Scholars have stressed that a
lack of finance and inadequate energy supply are part of the major problems affecting the growth
of the manufacturing sector, these factors are not considered in this study. Hence, this study
suggests that future study should consider the investigation of the impact of finance and
renewable energy on manufacturing performance.
REFERENCES
Abata, M.A. (2014). The impact of tax revenue on Nigerian economy (case study of federal board of Inland
Revenue). Journal of Policy and Development Studies, 9(1), 109-121.
Abdullah, S., & Morley B. (2014). Environmental taxes and economic growth: evidence from panel causality tests,
Energy Economics, 42(2), 27-33.
Adefeso, H.A. (2018). Government tax policy and performance of listed manufacturing firms in Nigeria: Evidence
from dynamic panel data model. Zagreb International Review of Economics & Business, 21(1), 1-15.
Akintoye, I.R., & Tashie, G.A. (2013). The effect of tax compliance on economic growth and development in
Nigeria, West-Africa. British Journal of Arts and Social Sciences, 11(11), 222-231.
Arisukwu, O., Olasosebikan, D., Asaleye, A.J., & Asamu, F. (2019). Feeding habit and health of undergraduate
students: evidence from Nigeria, Journal of Social Sciences Research, 10(1), 11-25.
Asaleye, A.J., Adama, J.I., & Ogunjobi, J.O. (2018). Financial sector and manufacturing sector performance:
Evidence from Nigeria, Investment Management and Financial Innovations, 15(3), 35-48
Asaleye, A.J., Isoha, L.A., Asamu, F., Inegbedion, H., Arisukwu, O., & Popoola, O. (2018). Financial development,
manufacturing sector and sustainability: Evidence from Nigeria, Journal of Social Sciences Research,
4(12), 539-546.
Asaleye, A.J., Lawal, A.I., Popoola, O., Alege, P.O., & Oyetade, O.O. (2019). Financial integration, employment
and wages nexus: Evidence from Nigeria, Montenegrin Journal of Economics, 15(1), 141-154.
Asaleye, A.J., Ogala, A.F., Aremu, C.O., Ogala, C.E., Lawal, A.I., Inegbedion, H., & Popoola, O. (2019). Design
and implementation of workers’ pension verification system in central region of Nigeria. International
Journal of Mechanical Engineering and Technology, 10(2); 127-136.
Asaleye, A.J., Okodua, H., Oloni, E.F., & Ogunjobi, J.O. (2017). Trade openness and employment: Evidence from
Nigeria. Journal of Applied Economic Sciences, 4(50), 1194-1209.
Asaleye, A.J., Popoola, O., Lawal, A.I., Ogundipe, A., & Ezenwoke, O. (2018). The credit channels of monetary
policy transmission: Implications on output and employment in Nigeria. Banks and Bank Systems, 13(4).
Barro, R.J. (1974). Are government bonds net wealth? Journal of Political Economy, 82(6), 1095-1117.
Chen, P., Chen, A.C., Chu, H., & Lai, C. (2017). Short-run and Long-run effects of capital taxation on innovation
and economic growth. Journal of Macroeconomics, 53(1), 207-221.
Eluyela, D.F., Adetula, D.T., Oladipo, O., Nwanji, T.I., Adegbola, O., Ajayi, A., & Falaye, A. (2019). Pre and post
adoption of IFRS based financial statement of listed small medium scale enterprises in Nigeria.
International Journal of Civil Engineering and Technology, 10(1), 1097-1108.
Eluyela, D.F., Akintimehin, O.O., Okere, W., Ozordi, E., Osuma, G.O., Ilogho, S.O., & Oladipo, O.A. (2018b).
Datasets for board meeting frequency and financial performance of Nigerian deposit money banks. Data in
Brief, 12(2), 25-36.
Eluyela, D.F., Akintimehin, O.O., Ozordi, E., Oladipo, O.A., Ilogho, S.O., & Okere, W. (2018a). Board meeting
frequency and firm performance: Examining the nexus in Nigerian deposit money banks. Heliyon, 4(2),
850-910.
Falade, O.E., & Olagbaju, I.O. (2015). Effect of government capital expenditure on manufacturing sector output in
Nigeria. Business and Economic Research, 5(2), 136-152.
Journal of Management Information and Decision Sciences Volume 22, Issue 3, 2019
190 1532-5806-22-3-141
Citation Information: Oladipo, O.A., Iyoha, O.F., Fakile, A.S., Asaleye, A.J., & Eluyela, D.F. (2019). Do government taxes have
implications on manufacturing sector output? Evidence from Nigeria. Journal of Management Information and
Decision Sciences, 22(3), 181-190.
Fashina, O.A., Asaleye, A.J., Ogunjobi, J.O., & Lawal, A.I. (2018). Foreign aid, human capital and economic
growth nexus: Evidence from Nigeria. Journal of International Studies, 11(2), 104-117.
Gale, W.G., & Samwick, A.A. (2014). Effects of income tax changes on economic growth. The Brookings
Institution, Economic Studies, 21(3), 1-15.
Haruyama, T., & Itaya, J. (2006). Do distortionary taxes always harm growth? Journal of Economics, 87(4), 99-126.
Huang, C., & Frentz, N. (2014). What really is the evidence on taxes and growth? A reply to the tax foundation,
Center on Budget and Policy Priorities.
King, R.G., & Rebelo, S. (1990). Public policy and economic growth: Developing neoclassical implications. Journal
of Political Economics, 98(5), 126-150.
Lin, H.C., & Russo, B. (1999). A taxation policy toward capital, technology and long-run growth. Journal of
Macroeconomics, 21(3), 463-491.
Mountford, A., & Uhlig, H. (2009). What are the effects of fiscal policy shocks? Journal of Applied Econometrics,
24(6), 960-992.
National Bureau of Statistics (2017). Nigerian Manufacturing Sector Summary Report: 2010-2017.
Obadiaru, D.E., Oloyede, J.A., Omankhanlen, A.E., & Asaleye, A.J. (2018). Stock market volatility spillover in
West Africa: Regional and global perspectives. Journal of Applied Economic Sciences, 6(6), 1597-1604.
Oloni, E., Asaleye, A., Abiodun, F., & Adeyemi, O. (2017). Inclusive growth, agriculture and employment in
Nigeria. Journal of Environmental Management and Tourism, 1(17), 183-194.
Pecorino, P. (1994). The growth rate effects of tax reform. Oxford Economics, 46(1), 492-501.
Perotti, R. (2005). Estimating the effects of fiscal policy in OECD countries. Federal Reserve Bank of San
Francisco, Proceedings.
Pesaran, M. H., & Shin, Y. (1998). An autoregressive distributed lag modelling approach to cointegration analyses.
Econometric Society Monographs, 31(2), 371-413.
Peter, N.M., & Simeon, G.N. (2011). Econometric analysis of the impact of fiscal policy variables on nigeria’s
economic growth. International Journal of Economic Development Research and Investment, 2(1), 171-
183.
Popoola, O., Asaleye, A.J., & Eluyela, D.F. (2018). Domestic revenue mobilization and agricultural productivity:
Evidence from Nigeria. Journal of Advanced Research in Law and Economics, 34(4), 11-25.
Tomola, M.O., Adedisi, T.E., & Olawale, F.K. (2012). Bank lending, economic growth and the performance of the
manufacturing sector in Nigeria. European Scientific Journal, 8(3), 19-34.
Uwuigbe, U., Eluyela, D.F., Uwuigbe, O.R., Obarakpo, T., & Falola, I. (2018). Corporate governance and quality of
financial statements: A study of listed Nigerian banks, Banks and bank systems, 13(3), 12-23.
Veronika, B., & Lenka, J. (2012). Taxation of corporations and their impact on economic growth: The case of EU
countries. Journal of Competitiveness, 4(4), 96-108.
... Empirically, some authors, including Yoke & Chan (2018) and Okpe (2018), argued that tax policy has an adverse implication on the manufacturing sector. On the contrary, some other studies indicate a positive relationship between tax policy and manufacturing (see Adefeso, 2018;Ewubare & Ozo-Eson, 2019;Oladipo et al., 2019). ...
... Over time, several empirical studies have been conducted to explore the effect of tax and fiscal policies on the manufacturing sector. Some studies illustrate that corporate tax and manufacturing sector output are positively related in Nigeria (Adefeso, 2018;Ewubare & Ozo-Eson, 2019;Hammed, 2018;Oladipo et al., 2019), and some others indicate a negative relationship (Okpe, 2018). Eze & Ogiji (2013) suggest that public expenditure is positively related to the manufacturing sector. ...
... The estimation results reveal exciting implications. For instance, the positive relationship between company income tax and the manufacturing sector output in Nigeria, both in the long-run and short-run, aligns with the findings of several studies (see Adefeso, 2018;Andabai, 2019;Aziz & Sharifuddin, 2019;Ehinomen et al., 2017;Ewubare & Ozo-Eson, 2019;Hammed, 2018;Oladipo et al., 2019;Ubesie et al., 2020;Uwuigbe, 2016). However, Okpe (2018), and Uffie & Aghanenu (2019) found the contrary outcome. ...
Article
Full-text available
The study examines whether tax policies in Nigeria have similar implications on the manufacturing sector’s output during the 1994Q1-2020Q4 period using the ARDL bounds testing approach. The bounds testing result suggests the presence of cointegration between tax policies and the manufacturing sector output. Further, the estimation results demonstrate that company income tax (CIT) and import tax are positively related to manufacturing sector output. In contrast, value-added tax (VAT) has a negative effect on the manufacturing sector output, both in the short- and long- term. In addition, the results of the Granger causality test indicate a unidirectional causal relationship running from tax policies to the manufacturing sector output and not vice versa. Thus, policies and measures are recommended to prioritize the CIT and import tax, review the assortment in the VAT, and ensure accountability and transparency in the tax system. Keywords: ARDL, manufacturing, tax policy
... Also theoretical assumption suggests that taxation influence output generation of the economy and some empirical evidence observed that taxation has an effect on the performance of economy on the sectorial level, though just like government expenditure most of this empirical evidence such as Oladipo, Iyoha, Fakile, Asaleye, and Eluyela (2019) [16] , Okoh, Amadi, Ojiya, and Ani (2019) [13] and Eze (2014) [7] mainly focused on agriculture and manufacturing sector. This oversight gave rise to the empirical question on whether this majority view on the effect of fiscal policy on sectorial performance holds for the insurance sector in Nigerian economy. ...
Article
Full-text available
One of the significant measures of economic development is the performance of its individual sectors. The insurance industry being an essential part of the economy's financial sector with inherent potentials to drive economic expansion deserves government consideration in its fiscal policies. This study aimed at examining the effect of government fiscal policy on the performance of the insurance sector using autoregressive distributive lag (ARDL) model on data from CBN bulletin 2020 and Federal Inland Revenue Service report from 1994 to 2020. The result of the study indicated that total tax revenue has a negative relationship with insurance premium both in the short run and in the long run. While government expenditure has a positive effect on insurance performance in the short run and in the long run. The co-integrating equation also signified that for any movement into disequilibrium is corrected within one period. The study therefore recommend among others that government should utilize its expansionary fiscal policy in a manner that it will create an enabling environment for sectorial development, improve investments and relatively increase the activities of the insurance sector.
... Also, data from the Annual Abstract of NBS and the World Bank Digest of Statistics. We used Time Series data for the analysis (See Ademola et al., 2020a;Oladipo et al., 2019a;. ...
Article
Full-text available
This research paper deal with the effect of capital flight (here after referred as KF) in the Nigerian economic sector covering 35 years (1981-2015). The study recognized the extent to which KF affects growth in the economic sector of Nigeria. The study identifies the problems Nigeria as a country face as a result of KF and proffers feasible solution which could be adopted by policy makers in Nigeria. We used secondary data from the Central Bank of Nigeria statistical bulletin. The statistical bulletin covers the economic indicators including Gross Domestic Product (GDP), External Debt, Foreign Direct Investment (FDI,) KF, Current Account Balance (CAB) and Exchange Rates (EXCHRATE) which are the variables for the study. We also used data from the Annual Abstract of Statistic of the National Bureau of Statistics (here after referred as NBS). We employed a Time Series Quantitative method for the analysis. The study found that the number of financial resources transferred out of Nigeria as the KF is significant. Therefore, the government would try as much as possible to curb KF to enable the development of the Nigerian economy. The study adds to the existing literature and empirical knowledge of the impact of KF on the Nigerian economic sector. This study shed light on the current account balance of Nigeria. This study also found that Nigerian import outweighs export even with the government agricultural policy. This study identified the KF as one of the significant reasons, or over-import and under-export in Nigeria.
... The principal economic goals of any evolving nation are to ensure that adequate revenue is generated to enhance the quality of human life in the country (Afuberoh & Okoye, 2014). Oladipo et al. (2019) viewed the vital aspect of tax compliance and found that it will improve government revenue generation positively when individual taxpayer sees the tax system and policy as fair, trustworthy, just, and judicious spending of the tax revenue. ...
Article
Full-text available
Tax compliance is a major contemporary debate surrounding corporate taxation in the business world. The tax avoidance issue, which remains an ethical problem for companies , has been a general concern in developed and developing countries alike. The main problem of this study is a non-tax compliance behavior of the corporate organization taxpayers in Nigeria. This study examined the influence of tax fairness on the tax compliance behavior of listed manufacturing companies in Nigeria. The paper adopted a survey research method, and four hundred (400) copies of the questionnaire were administered to the selected manufacturing companies of both consumer and industrial goods sectors. The Laffer Curve Theory underpinned this study and Correlation Analysis, Analysis of Variance (ANOVA), and Multiple Regression Analysis were also employed. The study found that there is a significant level of tax compliance among the listed manufacturing companies in Nigeria. The study also shows that the corporate taxpayer's perception of fairness of-2.765 (0.006) has a significant impact on corporate taxpayers' willingness to pay taxes and tax knowledge of 4.601 (0.000) significantly influenced tax compliance. Based on tax knowledge, the study recommends that tax authorities must improve the knowledge of taxpayers and tax collection agents through programs, initiatives, and training on tax awareness.
... For instance, bank employees who have a positive attitude toward M&A, are satisfied with their jobs and are well-integrated in M&A are likely to express a higher level of emotional labour than employees who are not (Akosah-Twumasi, Emeto, Lindsay, Tsey, Malau-Aduli, 2018: Yijälä and Luoma, 2019). Therefore, this study investigated micro-level processes associated with major organisational transformation, which remained a much-neglected aspect within the merger studies (Zhu, Li & Li, 2017;Chen & Vashishtha, 2017: Oladipo, Iyoha, Fakile Asaleye & Eluyela 2019b; this is a significant gap based on the availability of numerous studies which revealed that mergers and acquisitions have not led to any significant levels of accomplishment, thereby leading to its abandonment due to cultural or peopleassociated factors (Zuckerman, 2011. ...
Article
Full-text available
Mergers and acquisitions (M&As) are common among financial institutions. This process often exerts immense pressure on employees of these institutions. Hence, this study touches on the significant but neglected human angle aspect of M&A. Therefore, the study examined psychosocial predictors of emotional labour among employees of merged and acquired banks in Ibadan. The study design is cross-sectional, which involves using a quantitative data collection method to elicit responses from the participants. Furthermore, the convenience sampling method was used and selected four hundred, and twenty-two employees acquired or merged during the consolidation and post-consolidation eras in South-Western Nigeria. A structured questionnaire that measured job satisfaction, acculturation, attitude to M&A and emotional labour was used to collect data from the respondents. Data analysis was done using SPSS software window 10.0. The mean age of respondents was 32 years, with a standard deviation of 7.31. The results showed that attitude towards M&A (β = 0.39; p<.05) and acculturation (β = 0.36; p<.05) were significant independent predictors of emotional labour. Furthermore, attitude towards M&A (β = 0.32; P<.05) and acculturation (β = 0.28; p<.05) were also significant independent predictors of emotional labour per se, personal efficacy, and for false face, respectively. Therefore, it was concluded that employees' emotions and job satisfaction should be factored into the management's strategic plan during M&A because the success or failure of this undertaking rests on them. Therefore, it was recommended that bank managers pay adequate attention to acculturation and the attitude of employees during a major organisational change to enhance emotional labour performance.
... The outcome of the result according to Ogunjobi (2015) shows that an increase in electricity generation will promote long-run output and employment in the industrial sector. From the foregoing, impact of electricity consumption on manufacturing performance, most especially in developing economies are scanty, with most studies focused on effect of tax, poverty, human capital, financial performance, among others (Oladipo et al., 2019b;Olopade et al., 2019;Popoola et al., 2019;Lawal et al., 2019;Asaleye et al., 2019c). Nigerian' economy in the 1970 and 1980s promote significant employment generation through the manufacturing sector Asaleye et al., 2019b;Oladipo et al., 2019a). ...
Article
Full-text available
Gender diversity is a focal issue in modern management of public and non-public enterprises. This study examines the relationship between gender diversity and corporate social responsibility to ascertain whether companies with a higher proportion of women are more socially conscious in their corporate social responsibility activities. Applying panel data method for the period between 2010 and 2019 as well as other econometric analysis such as descriptive analysis, correlation analysis and Hausman test (fixed and random effect model), this study discovered that there is a significant and positive relationship between women on the management board and corporate social responsibility (CSR). This implies that increased presence of women on the board of directors of companies can add economic value to firms in Nigeria.
Article
Full-text available
The research examined the impact of government exchange rate expenditures in Nigeria for period 1986 to 2019. The study used secondary data from the Central Bank of Nigeria's Statistical Bulletin, and VAR Vector Auto regression Estimates to measure the impact of the independent variables (capital and recurring spending, deficit finance, money supply, and trade openness) on the dependent variable exchange rate. The study revealed that government spending has positive but insignificant effect on exchange rate. This goes to show that government spending is not a reliable policy instrument for exchange rate stability in Nigeria within the period of the study therefore the study makes the following recommendations. There is need for proper re-evaluation of government fiscal policies before adoption, credible supervision, monitoring and prudent spending in a bid to achieve the desired or stated results. Government should invest in capital expenditures on infrastructures and human capital development. The government should build an export-driven master plan to catalyze Nigeria's economic and industrial growth and free the country from import dependency.
Article
Full-text available
The development of tax payment decision-making models (Sociological, Economical and Psychological) has focused on economic and behavioural factors affecting tax compliance. The issue of tax evasion, which remains an ethical problem for companies, has been a general concern in developed and developing countries alike. The main problem of this study is low tax collection on the part of relevant tax authority, couple with non-tax compliance behaviour of the corporate taxpayers in Nigeria. This study examined the effect of tax fairness of tax authority on tax compliance behaviour of taxpayers in the Nigerian manufacturing sector. This study adopted a survey research method, and 400 copies of the questionnaire were administered to the selected listed manufacturing companies in Nigeria and relevant tax authority staff (FIRS). Theory of Planned Behaviour underpinned this study and Correlation analysis, Analysis of Variance (ANOVA) and Multiple Regression analysis were also employed. The
Article
The implications of monetary policy on agricultural performance have not been given adequate attention in literature to date, especially in connection with employment and export in the agricultural sector. Determining the right channels of monetary policy can help to achieve sustainable growth in developing economies. This study examines the impact of monetary policy channels on agricultural performance in Nigeria using structural vector autoregression (SVAR) and dynamic ordinary least squares (DOLS). The study uses output employment and export as metrics for agricultural performance, and the channels of monetary policy considered are credit, interest rate, money and exchange rate. The SVAR variance decomposition findings show that the forecast error shocks of monetary policy channels affect agricultural performance. Likewise, the long-run equations from the DOLS show that output has a positive relationship with money supply, a negative relationship between employment and interest rate, and a negative relationship between exchange rate and export. Based on the findings, the study suggests that the Nigerian government should look beyond the primary objective of stabilizing the economy via money supply and interest rate and consider the secondary benefits of bolstering output and employment in the agricultural sector.
Article
Full-text available
This study seeked to investigate the impact of fiscal policy variables on Nigeria's economic growth between 1970 and 2009. In order to reduce the problem of stationarity usually associated with time series data, we adopted the arcane method of Vector Auto Regression (VAR) and error correction mechanism techniques. The result revealed that there exist a long-run equilibrium relationship between economic growth and fiscal policy variables in Nigeria. Also, own shocks constitute a significant source of variations in economic growth, the forecasted errors in the short-run, range from 76 percent to 100 percent over a 10 years horizon while the response of the GDP to one standard innovation in government expenditure is negative in the short-run except in period 2. Furthermore, tax revenue shocks have effect on the GDP in the short and long run. Above all, the response of GDP to one standard innovation in capital inflow is positive in the short-run. Consequently, it is recommended that government should formulate and implement viable fiscal policy options that will stabilize the economy. This could be achieved through the practice of true fiscal federalism and the decentralization of the various levels of government in Nigeria. It further suggested that there should be consistency in macroeconomic policies implementation in the non-oil sectors of the economy by providing relevant incentives to foreigners wishing to invest in the agricultural sector and manufacturing sectors in Nigeria. More importantly, there should be appropriate macroeconomic policy mix in managing the economy.
Article
Full-text available
Foreign and domestic debts have raised questions about fiscal sustainability and implications for sustainable development. One of the major problems in the agricultural sector in developing economies is inadequate capital, despite its centrality to growth and development. This study examines the long-run relationship and the casual relationships between domestic revenue mobilization and agricultural productivity in Nigeria using Auto Regressive Distributed Lag and Granger Noncausality. Using agricultural productivity as the dependent variable, the result revealed that agricultural productivity has a negative long-run relationship with government recurrent expenditure on agriculture and tax revenue, while agricultural credit is not statistically significant. This result indicated that supplementary resource such as foreign aid could be embarked on in the long-run. Reliance on foreign aid may be volatile to the economy, and as well not suitable to achieve long-term goals. So, there is a need to maximize benefit from tax revenue and ensure that resources are allocated to prioritizes right sectors such as the agricultural sector. The causality test revealed that there is a bi-directional relationship between agricultural productivity and tax revenue. The study recommended among others, the need for public finance reforms to increase government revenue and promote growth in the agricultural sector by enhancing the quality of the tax system.
Article
Full-text available
This study investigates the impact of financial integration on wages and employment in Nigeria through the channels documented in the literature. The Autoregressive Distributed Lags is used to examine the long-run relationship. The Structural Vector Autoregressive is used to estimate the shock impact, while the Granger Non-causality was used to investigate the causal effects. The findings reveal the existence of long-run relationship when employment is used as a dependent variable and no long-run relationship when wage is used. In the long-run, employment is negatively statistically significant with financial integration, conforming to the proposition of Lucas Paradox. Evidence from the forecast error shock shows that financial integration shock shows more variations in employment more than the wage. The causality test results revealed no causal relationship between financial integration and wage, but unidirectional relationship from financial integration to employment; this follows the supply- leading view. The implication of the findings is that financial integration leads to weaken competitiveness of Nigeria economy and causes it to be more vulnerable to capital reversal, which may endanger employment in the long-run. The study suggested the development of domestic policies measures such as capital controls to be designed to shape the composition of inflows, among others to improve the situation. © 2019, Economic Laboratory for Transition Research. All rights reserved.
Article
Full-text available
This study examines volatility spillover between stock markets in the West African region, and with the United States of America (US) and United Kingdom (UK) stock markets using the Exponential Generalized Autoregressive Conditional Heteroscedastic (E-GARCH). Daily stock market index returns from 2008-2016 were analysed considering two sub-sample periods representing periods of turbulence and tranquil. Findings from the study reveal that there is the presence of significant volatility spillover effects between stock markets in the West African region and also with major global markets of US and UK. Significant changes are also observed in the direction, magnitude and sign of impact during the period of crises and in the post crises period. The results of this study is important to local, regional and international investors, market participants and regulatory bodies as it implicates on portfolio diversification strategies, capital controls policies and efforts towards regional stock market integration.
Article
Full-text available
This study examined the comparison between pre and post-adoption of IFRS based financial statements of listed SMEs in Nigeria. Data used were generated from the annual report of the sampled listed SMEs on Nigerian stock exchange considering the period 2012-2015. The study used Return on Capital Employed (ROCE), Return on Equity (ROE), Debt to Equity (D/E) and Earnings per Share (EPS) as a proxy for measuring the profitability, liquidity and market ratios of the sampled SMEs. We analyzed the study data using one-sample Kolmogorov Smirnov test, descriptive statistics and Mann Whitney u-test. Findings from the study show that there is no significant difference between profitability and leverage ratios of IFRS and NGAAP-based financial statements of listed SMEs. Though further findings revealed that a significant difference exists amid market ratios prepared under IFRS and NGAAP-based financial statements of listed SMEs. The major implication of the study is that IFRS has a significant impact on market ratio. This is due to the introduction of fair value measurement and impairment of asset introduced by IFRS. Thus, the study recommends the need for SMEs to be involved in the continuous training of concerned personnel in order to comply with the requirement of International Financial Reporting Standard.
Article
Full-text available
Dependence on the oil sector by the Nigerian government has generated a question about economic sustainability. Even though the country experienced substantial growth in the economy before the economic recession in mid of 2016, the growth had not improved unemployment and poverty rate. Therefore, the study investigates the impact of financial development indicators on the manufacturing sector in Nigeria with the aim to promote sustainable growth and development using the Vector Error Correction Model. The findings from the study show no bi-directional causal effects between financial indicators and output in the manufacturing sector. However, the study showed the presence of joint long-run and short-run causality when output in the manufacturing sector is used as a dependent variable. Likewise, the variance decomposition showed that the forecast error shocks of the financial development indicators affect output in the manufacturing sector at different horizons The implication is that long-run policies can be considered to improve the manufacturing output in Nigeria via the financial sector to promote sustainable growth. There is a need to develop a framework for policy mix and evaluate conflicting policies to ensure effectiveness in policy implementation among others.
Article
Full-text available
There has been an increasing trend in the unemployment rate despite the growth rate witnessed. Monetary policy is presumed as one of the ways to improve the situation. Likewise, the relationship between monetary policy and employment has generated controversial debates in the literature. Though its connection has been extensively studied, however, the implications of monetary policy in respect to time frame perspectives on employment and output have not been widely addressed in the literature. This study provides evidence on shock effects, long and short-run impacts of monetary policy transmission through the credit channels on output and employment in Nigeria within the period of 1981 to 2016 using the Structural Vector Autoregression and Autoregressive distributed lags (ARDL). Evidence from the forecast error shock showed that variations in monetary policy indicators affect output more than employment in the first two periods; however, it affects employment more afterwards. The ARDL results show no evidence of co-integration when output is used as the dependent variable; conversely, cointegration exists when employment is used as the dependent variable. The monetary policy indicators: money supply, bank deposit liability and interest rate are statistically and economically significant with employment in the long run. In the short run, money supply and interest rate are economically and statistically significant. The findings revealed that the Nigerian government can maximize the long-run benefits of monetary policy through the credit channels on employment. Hence, there is a need for policymakers to look beyond short-run gain and promote long-run employment via monetary policy among others.
Article
Full-text available
The main aim of this study is to examine the impact of board meeting frequency on firm performance of deposit money banks in Nigeria. Data used for the study were spawned from annual reports of the deposit money banks listed on Nigeria stock exchange (NSE) market. We employed a panel regression to test the significant association amid variables. Our main empirical result shows a positive association amid board meeting frequency and firm performance. Although, our findings also show that board size was positive and not significant and firm size was negative and significant. The study recommended that management of banks should consider increasing their frequency of board meetings to at least four (4) meetings per year. This will allow the sampled deposit money banks to comply with the good governance code in Nigeria which states that companies must meet at least once per quarter.
Article
Full-text available
This study investigated the influence of Corporate governance on the timeliness of financial reports of listed banks in Nigeria. In order to provide answers to the research questions raised in this study, data were generated from the annual report of the listed banks on the Nigerian Stock Exchange considering the period 2008–2015. The study used Board size, Board Independence and Foreign Executives on the board as proxies for corporate governance. The data were analyzed using descriptive statistics, correlation matrix and panel data regression analysis. It was observed that board size had a non-significant negative relationship with the timeliness of financial reports. Also, the study observed that board independence also had a non-significant negative relationship with the timeliness of financial reports. Finally, it was observed that foreign executives on the board had a significant positive relationship with the timeliness of financial reports. The study thus recommends that the existing legal framework in Nigeria should be developed that clearly specifies the rights and obligations of a bank, its management and, of course, other stakeholders.
Article
It is mandatory by law for all employers in Nigeria to engage in occupational scheme pension. However, the principles of pension documentation and services are static despite the dynamics of reforms. Most of these problems are caused by the manual approach used by the pension fund administrator. The aim of the pension system is to expedite consumption equalization by making mandatory provision for the future after service. This study analyses the problems faced by many retirees in the Central Region of Nigeria, Kogi State in recent times. The study seeks to develop a secure system for pensioners to assess information on payment of their pension with ease through a computerized pension verification system by adapting the Waterfall model, using tools like the Hypertext Preprocessor Program (PHP) for the programming language which is used in carrying out the web-based pension fund management scheme for effective, efficient, reliable and easy accessibility, and also the use of MYSOL for the database. Based on the findings, it is recommended that the staff pension system developed in this research should be adopted by all states.