Public Governance Quality and Tax Compli ance Behavior in Nigeria: The Moderating Role of Financial Condition and Risk Preference

Abstract

To have better understanding of compliance behavior of individual taxpayers in developing 
countries especially Nigeria, this study is undertaken primarily to test relationship between tax
payers’ perception about public governance quality and their compliance behavior as well as to 
determine whether the relationship is moderated by financial condition and risk preference indi
vidually and jointly. This study involved a survey of individual taxpayers’ opinion, perception 
and behavior about public governance quality as well as tax compliance. The major finding of 
this study is that public governance quality has significant positive relationship with tax com
pliance behavior. The study also indicates that risk preference has strong negative moderating 
effect on the relationship between public governance quality and tax compliance behavior. Ad
ministration of income tax in Nigeria is characterized by low compliance level and therefore, 
there is no doubt that improvement in public governance quality would contribute significantly 
in reawakening the culture of tax compliance among individual taxpayers in Nigeria. Empiri
cally, nothing much is known in tax compliance literature about the influence of public govern
ance quality on tax compliance behavior of individual taxpayers as well as the moderating ef
fect of financial condition and risk preference on tax compliance and its determinants. This 
study extended tax compliance model to incorporate public governance quality and moderating 
effects of financial condition and risk preference.