The Mediating Effect of Profitability on Nigerian Ownership Structure and Tax Avoidance

This study explores the effect of profitability on ownership structure and tax avoidance in Nigeria, providing fresh insights into how governance and financial performance interact to shape corporate tax behavior. Drawing on panel data from listed Nigerian companies over a twelve-year period (2010–2021), the research employs Structural Equation Modeling (SEM), correlation analysis, bootstrapping, and Monte Carlo simulation to rigorously test direct and indirect effects. The findings reveal that ownership structure significantly influences profitability, while profitability itself has a notable impact on tax avoidance. Specifically, managerial and foreign ownership indirectly affect tax avoidance through profitability, whereas institutional ownership and ownership concentration show no mediating effect. The study concludes that concentrated ownership and high institutional holdings tend to support management tax avoidance policies, underscoring the dual pressures of managerial opportunism and shareholder short-termism. Recommendations highlight the need for balanced ownership structures, stakeholder consideration, and effective tax planning.