Corporate Governance Characteristics and Earnings Management of Quoted Non-Financial Firms in Nigeria
DOI:
https://doi.org/10.33003/fujafr-2023.v1i3.65.100-114Keywords:
Corporate Governance, Earnings Management, Foreign income, Non-Financial Firms, NigeriaAbstract
This study investigates the relationship between some corporate governance attributes and earnings management of listed firms in Nigeria. This study uses the correlational research design and purposively sampled secondarily sourced data over the period from 2005 to 2020 of 75 non-financial firms listed on the floor of the Nigerian Exchange Group (NXG). The Robust Least Squares Estimators results reveal that board independence (BODI) is positively significant with earnings management; board size (BODS board gender diversity (BGDIV) and audit committee size (ACS) are negatively significant with it while managerial ownership (MOWN); chief executive officer with military experience (CEOME) and number of foreign directors (NFODIR) are insignificant. While foreign income (FINCOME), year fixed effects (YDUM) and industry fixed effects (IDUM) dummies are negatively and statistically significant, the Big4 auditors is positively insignificant. The study concludes with some recommendations that management, among others, should maintain or increase the present level of board size, audit committee size and the number of females in the board since these variables deter management in managing earnings for the period under review.
References
Al-Zaqeba, M. A. A., Hamid, S. A., Ineizeh, N. I., Hussein, O. J. & Albawwat, A. H. (2022). The effect of corporate governance mechanisms on earnings management in Malaysian manufacturing companies. Asian Economic and Financial Review, 12(5), 354-367. DOI: https://doi.org/10.55493/5002.v12i5.4490
Aryal, R. & Dhesi, G. (2022). The empirical study of the effect of corporate governance on earnings management based on FTSE350, UK. International Journal of Business and Economic Development, 10(2), 19-35. DOI: https://doi.org/10.24052/IJBED/V010N02/ART-02
Croux, C., Dhaene, G. & Hoorelbeke, D. (n. d.). Robust Standard Errors for Robust Estimators. Department of Applied Economics, Naamsestraat 69, 3000 Leuven, Belgium, 1-33.
Egbadju and Kunemoemi(2019) development of corporate social responsibility (CSR): From evolutional and definitional perspectives. Journal of Economics, Management & Social Science, 5(1), 185-201.
Egbadju, L. U. & Jacob, R. B. (2022). Corporate governance mechanisms and performance of quoted non- financial firms in Nigeria. International Journal of Intellectual Discourse (IJID), 5(4), 135-147.
Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 301-325. DOI: https://doi.org/10.1086/467037
Gadhoum, Y. (2021). Corporate governance and earnings management: Evidence from Canada. Journal of Financial Risk Management, 10, 516-544. DOI: https://doi.org/10.4236/jfrm.2021.104027
Gujarati, D. (2003). Basic econometrics (4th ed.). McGraw-Hill.
Hassan, Y., Abousamak, A. & Hijazi, R. (2022). Does corporate governance constraint earnings management in an unstable economic and political environment? Asian Economic and Financial Review, 12(12), 1074-1093. DOI: https://doi.org/10.55493/5002.v12i12.4670
Healy, P. M., & Wahlen, J. M. (1999). A Review of Earnings Management Literature and Its Implications for Standard Setting. Accounting Horizon, 13(4), 365-383. DOI: https://doi.org/10.2308/acch.1999.13.4.365
Hong, N. T. H., Anh, N. T., Hoang, N. T. V. & Minh, D. N. (2023). Corporate governance, external financing, and earnings management: New evidence from an emerging market. Future Business Journal, 9(27), 1-22. DOI: https://doi.org/10.1186/s43093-023-00206-3
Iqbal, A., Sharofiddin, A., Farooq, Z., Khan, S. A., Bilal, F., Kamran, M. & Rehman, S. (2022). Corporate governance and earnings management practices: Moderating role of audit committees. Journal of Positive Psychology, 6(12), 57-72.
Ismail; M. I. & Rasheed, H. A. (2021). Robust Regression Methods / a Comparison Study. Turkish Journal of Computer and Mathematics Education , 12(14), 2939-2949.
Jensen, M. C., & Meckling, W. H. (1979). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Springer. DOI: https://doi.org/10.1007/978-94-009-9257-3_8
Kjærland, F., Haugdal, A. T., Søndergaard, A. & Vågslid, A. (2020). Corporate governance and earnings management in a Nordic perspective: Evidence from the Oslo stock exchange. Journal of Risk and Financial Management, 13(256), 1-18. DOI: https://doi.org/10.3390/jrfm13110256
Korolo, E. O. (2023). Corporate governance attributes and financial performance of listed industrial goods companies in Nigeria. FUDMA Journal of Accounting and Finance Research [FUJAFR],1(3), 40-51. DOI: https://doi.org/10.33003/fujafr-2023.v1i3.55.40-51
Lee, B. B. & Vetter, W. (2015) Critical evaluation of accrual models in earnings management studies. Journal of Accounting and Finance, 15(1), 62-71.
Maeso-Fernandez, F., Osbat, C. & Schnatz, B. (2004). Towards the estimation of equilibrium exchange rates for CEE acceding countries: Methodological issues and a panel cointegration perspective. Working paper Series No. 353. DOI: https://doi.org/10.2139/ssrn.533022
Mensah, E. & Boachie, C. (2023) Corporate governance mechanisms and earnings management: The moderating role of female directors. Cogent Business & Management, 10(1), 1-20. DOI: https://doi.org/10.1080/23311975.2023.2167290
Naz, A., Naďová Krošláková, M., Farheen, I., Čvirik, M., & Michálková, A. (2023). Nexus between corporate governance and earnings management in family and nonfamily firms. Economics and Management, 26(2), 42–57. DOI: https://doi.org/10.15240/tul/001/2023-2-003
Nkoro, E. & Uko, A. K. (2016).Autoregressive Distributed Lag (ARDL) cointegration technique: Application and interpretation. Journal of Statistical and Econometric Method, 5(4), 63-91.
Ozili, P. K. (2021). Corporate governance research in Nigeria: a review. MPRA Paper No. 107271. 1-35. Online at https://mpra.ub.uni-muenchen.de/107271/ DOI: https://doi.org/10.2139/ssrn.3758473
Pham, T. B. C., Nguyen, H. L., Vu, T. M. T. & Truong, V. T. (2022).Corporate governance and earnings management struggles: responses to adapt a modern capital mobilisation in the transitional economy. Cogent Business & Management, 9(1), 1-20. DOI: https://doi.org/10.1080/23311975.2022.2108216
Razaq, A. G., Alhassan, A. & Omole, P. M. (2023). Corporate governance mechanisms and sustainability reporting practices of listed non-financial firms in Nigeria. FUDMA Journal of Accounting & Finance Research (FUJAFR),1(3), 1-18. DOI: https://doi.org/10.33003/fujafr-2023.v1i3.50.1-18
Umaru, D. (2014) Audit attributes and financial reporting quality of listed building material firms in Nigeria. (Doctoral thesis, Ahmadu-Bello University Repository, Zaria.)
Usaini, M., & Hooy, C. W. (2023). The effect of corporate governance on earnings management in Nigeria’s financial institutions: Moderating role of CEO competency. Malaysian Management Journal, 27(July), 21-58. DOI: https://doi.org/10.32890/mmj2023.27.2
Vernanda, P. A. & Khusnul, P. (2021). The effect of good corporate governance mechanism on earnings management in Lq-45 companies. [S.l.]: Social Science Research Network (SSRN). https://ssrn.com/abstract=3846777
Downloads
Published
Issue
Section
License
Copyright (c) 2023 FUDMA Journal of Accounting and Finance Research [FUJAFR]
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The FUDMA Journal of Accounting and Finance Research (FUJAFR) operates a copyright policy that ensures a balance between author rights and wide dissemination of scholarly work.
1. Author Copyright Retention
Authors retain full copyright of their published work without restriction. Submission to FUJAFR does not transfer ownership of copyright to the journal.
2. License to Publish
By submitting a manuscript and upon acceptance, authors grant FUJAFR:
- The right to publish, reproduce, and distribute the article
- The right to identify itself as the original publisher of the work
This grant is non-exclusive, meaning authors are free to reuse their work in other contexts, provided proper acknowledgment of the original publication in FUJAFR is made.
3. Licensing of Published Content
All articles are published under the:
Creative Commons Attribution-NonCommercial License (CC BY-NC 4.0)
Under this license:
- Users may share and adapt the work for non-commercial purposes only
- Proper attribution to the author(s) and the journal is required
- Any commercial use requires explicit permission from the copyright holder
4. Author Reuse Rights
Authors are permitted to:
- Archive their published articles in institutional repositories or personal websites
- Share their work for educational and research purposes
- Reuse portions of their work in future publications (e.g., books or other articles), provided proper citation of the original publication is included
5. Third-Party Content
Authors are responsible for obtaining permission to use any third-party copyrighted material (e.g., images, tables, datasets) included in their manuscripts. Proper acknowledgment must be provided where required.
6. Attribution Requirement
All users of FUJAFR content must provide appropriate credit, including:
- Author name(s)
- Article title
- Journal name (FUJAFR)
- Year of publication
