International Journal of Business and Management Review (IJBMR)

EA Journals


Dynamic Analysis of Financial Statement Fraud on Profitability of Manufacturing Firms in Nigeria (Published)

The aim of this research study is to assess the impact of financial statement fraud on profitability of selected Nigerian manufacturing firms covering (2002-2016). The specific objectives focused on ascertaining the effect of variables of financial statement fraud on return on assets (ROA). To achieve these objective, descriptive research design was used for the study while secondary data was collected from the financial reports of the selected firms and website of Security and Exchange Commission. The Analysis of Covariance (ANCOVA) was used and STATA II econometric method was adopted in the analysis of the data. Beneish model was adopted in the analysis of the financial reports to create a dummy variable for the selected firms from 2002-2016 and validation of the parameters were ascertained using various statistical techniques such as t-test, co-efficient of determination (R2), F-statistics and Wald chi-square. Three hypotheses were formulated and tested using the t-statistics at 5% level of significance. The findings of the analysis revealed that there is a significant relationship between financial statement fraud and profitability in Nigerian manufacturing industry. It was found that increase in fictitious revenue in manufacturing industry would lead to low profitability. The implication of this is that increase in fictitious revenue would lead to decrease in performance. The study therefore recommended that pragmatic policy options need to be taken in the manufacturing industry to effectively manage fictitious revenue, in order to enhance manufacturing industry performance in the country and also financial statement fraud should be adequately inculcated into the internal control system of manufacturing firms for the effective running of the manufacturing industry in Nigeria.

Keywords: Beneish Model, Fictitious Revenue, Financial Statement, Fraud, Profitability


The public sector constitutes the largest sector of the Nigerian economy. It employs the largest population of the labour force and also controls the bulk of the financial resources of the country. What this implies is that whatever adversely affects the public service has a huge multiplier effect on national development. The ghost can be a real person who knowingly or not is placed on the payroll, or a fictitious person invented by the dishonest employee. Thus, this paper attempts an x-ray the menacing ill of ghost workers, by the adoption of some basic accounting procedures to ensure internal control of public funds. This is because the public sector is the most venerable sector to employee frauds. The research findings show that public sector management in Kogi State has not lived up to expectation especially with regards to human resource management, good internal control system and good accounting  procedure to reduce the act of ghost workers, among others. The study recommends the formulation of good human resource and recruitment policy, attractive pay package and internal control/audit department.

Keywords: Corruption, Effectiveness, Efficiency, Fraud, Ghost, Public Sector

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