ABSTRACT

This study empirically investigates the effect of financial leverage and tax effectiveness on the performance of non-finance listed firms in Nigeria over the period 2015-2019. The study adopted the panel least square regression method on the sourced data. The study utilized two (2) independent variables; leverage (LEV), corporate tax (CORPTAX) and two (2) control variables; firm size, firm age, the findings showed that the independent variables as well as the control variables does not have a significant impact on the performance of non-finance listed firms in Nigeria. Specifically, leverage (LEV), corporate tax (CORPTAX) and firm age (FAGE) had a negative but insignificant impact on the performance of non-finance listed firms in Nigeria, while firm size (FSIZE) had a positive but insignificant impact on the performance of non-finance listed firms in Nigeria. 

 Against the backdrop of the foregoing findings, the study recommends that; management of quoted non-finance firms in Nigeria should be cautious in their employment of leverage so that the cost of debt does not outweigh its benefits as proposed by the tradeoff theory; management of non-finance listed firms should be cautious of the effect of taxation on its performance thereby creating measures and appropriate mechanism to ensure that the firm is not left worse off because of taxation;  financial managers should be flexible in borrowing because debts are able to bring some benefits such as gaining tax deductible expense; and for non-finance listed firms to enhance their financial performance, it is necessary that they find the appropriate mix of debt and equity capital that best suits them which can become their optimal capital structure.