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The purpose of this paper is to examine whether industry‐specific factors play a more significant role in the financing decisions of firms than firm‐specific characteristics; and to determine the degree of uniformity that exists between a firm's capital structure and industry financing patterns in Nigeria.

The described study makes use of fixed effects panel regression techniques. The dataset, which covers the period 1990‐2006, comes from a sample of 71 non‐financial firms quoted in the Nigerian Stock Exchange.

The study finds support for both the pecking order theory and the trade‐off theory of capital structure in Nigeria. Firms/industries that are more profitable have less proportion of debt, and those that have a higher level of asset tangibility use more long‐term finances. Empirically, the study reveals that the set of factors that explain firm‐specific determinants of capital structure do not statistically and significantly explain the way industries follow finance.

The study affirms the need for firms to invest reasonable resources in setting up capital structure policies, rather than herd along industry patterns.

Though studies on industry herding and financial leverage are not new, the paper gives interesting insights into the nature of the relationship in an atmosphere of shortage of capital supply and poor corporate performance.

The purpose of this paper is to establish whether inefficiency in a tax system and the likely difficulty in resolving tax matters can reduce the appeal for tax shield as incentive for debt financing, and by so doing exacerbate the cases of tax fraud.

A review approach/theoretical approach is adopted in the paper, where, in addition to reviewing literature on the relationship between tax incentives and corporate financing, the paper examines the structure of the Nigerian tax system, the gaps, and some pending tax cases involving foreign firms in Nigeria. Based on some theoretical judgments, efforts were made to link the rising cases of tax frauds to the dwindling appeal for tax shield as an incentive for the use of debt.

The study reveals that, as in the case of Nigeria, an environment of multiple tax system reduces incentives to pay tax or for voluntary compliance; that the exclusion of crucial non‐debt tax shelters such as depreciation, heightens pressure on the use of debt‐based tax shelters; and that controversies on deductibility make it difficult to distinguish between criminal and civil proceedings in tax cases.

The paper is only theoretical. The number of cases captured is very limited. However, the issue of tax frauds among corporate entities in the country remains very popular.

The paper is the first to examine the likelihood of an inefficient tax environment to reduce the appeal of tax shield as an incentive to debt financing.