Influence of Tax Planning on Financial Performance of Manufacturing Companies Listed at Nairobi Securities Exchange

Abstract

This study sought to find out the influence of tax planning on financial performance of the manufacturing firms listed on the Nairobi Securities Exchange during the period 2010-2017.The study adopted a positivism research philosophy and an explanatory research design. SPSS version 23 was used to analyze data where both descriptive and inferential statistics was done. Multiple linear regression model was adopted to study the association between the variables while utilizing panel data. The study findings showed that there is no significant statistical association between tax planning and financial performance of the manufacturing companies listed in the Nairobi Securities Exchange. The results of the study indicated that capital intensity, research and development expenditure and company size have a positive insignificant association with financial performance. Further, debt to equity ratio indicated an insignificant negative relationship with financial performance. The study concluded that financial performance of manufacturing firms listed at the Nairobi Securities Exchange is not influenced by the tax planning. The study recommends that the manufacturing companies invest more in non-current assets and increase expenditure on the research and development to realize significant positive impact on financial performance. They should also manage their debt to equity ratios to avoid excess financing costs that may be detrimental to their financial performance.