Creative Accounting and Corporate Failures on Nigeria Listed Firms (Published)
This study investigated the link between creative accounting and corporate failures in Nigeria. Four objectives were set to guide the study visa viz: to investigate the effect of discretionary accrual management; real earnings management; income smoothing and tax avoidance on corporate failure of companies listed on Nigerian exchange group Plc. correlation research design was adopted and sampled of twenty companies was purposively engaged from the total of one hundred and seventy firms listed on Nigerian exchange group. The study covered the periods 2015 to 2022 while the secondary data used for the study were generated from annual reports and accounts of the firms sampled. Analysis was done using descriptive statistics, correlation analysis and regression estimation as was aided by e-view 9. Result from the empirical analysis indicates that all the independent variables of the study (discretionary accrual management, real earnings management, income smoothing and tax avoidance) have inverse and no significant relationship with corporate failures on Nigeria listed firms. The implication of the study therefore is that, although creative accounting has retarding effect on corporate failures, but it’s not strong enough to have caused the corporate collapse witnessed in Nigeria. The study then recommends amongst others that professional Accounting bodies like ICAN should intensify their efforts to promote ethical accounting practices among practitioners through regular training, workshops, and awareness campaigns.
Keywords: Income Smoothing, corporate failure, discretional accrual management, real earnings management, tax avoidance
Effect of Managerial Ownership and Audit Committee Financial Expertise on Earnings Management of Listed Manufacturing Companies in Nigeria (Published)
Earnings management research has a long and rich history. However, the effect of managerial ownership and audit committee financial expertise on earnings management is rarely conducted in the developing countries like Nigeria. Therefore, this study examines how managerial ownership and audit committee financial expertise on earnings management of listed manufacturing companies in Nigeria. This study used the Roychowdhury approach to measure real earnings management. Thirty-four (34) manufacturing companies out of seventy-three (73) population that were listed on the Nigerian Exchange (NGX) from 2007 to 2021 was selected as sample size. Data was gleaned from the annual financial reports of the sampled companies for this study. Descriptive statistics, Pearson correlation, and quantile regression analysis are the econometric techniques used to test the analysed data and for hypothesis testing. Results from the study showed that managerial ownership significantly affects real-earnings management. When the effect was moderated by the financial expertise of the audit committee, the effect of ownership structure on real earnings management disappears. The result from the study show that managers of manufacturing firms in Nigeria should be encouraged to own more shares in the companies they manage in order to minimize real earnings management. The evidence can theoretically serve as a solid foundation for regulatory action, notably through improving the alignment of managers’ and shareholders’ interests. The results from this study have important implications for regulators, who will gain from understanding how managerial ownership affects real earnings management and improve the accuracy of financial reporting. The findings will also help policymakers and academics to understand how managerial ownership affects real earnings management in Nigeria.
Citation: Irom M.I., Okpanachi J., Ahmed N.M., and Agbi S.E. (2023) Effect of Managerial Ownership and Audit Committee Financial Expertise on Earnings Management of Listed Manufacturing Companies in Nigeria, European Journal of Accounting, Auditing and Finance Research, Vol.11, No. 2, pp.15-35
Keywords: Earnings Management, Managerial Ownership, audit committee financial expertise, real earnings management