Earnings Management and Its Implications on Management of Quoted Manufacturing Firms in Nigeria

Abstract

This study is motivated by concerns investors and other financial reports users have shown after observing many business failures shortly after declaring impressive financial performance. The relationship that may subsist between diverse performance measurements and earnings management in selected manufacturing companies in Nigeria is explored. Twenty-seven (27) firms listed on the Nigerian Stock Exchange (NSE) were purposively drawn for the study using published financial statements for the period 2008-2015. Further, a questionnaire was designed and administered to customers and staff of the companies included in the study. Pooled regression and panel data analysis were carried out and the results show that financial variables of leverage and growth, as well as the non-financial variable perceived quality, significantly influence Discretionary Accruals. Consequently, users of financial reports are encouraged to use both financial and non-financial measures to evaluate companies. The research also emphasized the need for the financial and regulatory authorities to intensify efforts in ensuring that firms manage their earnings properly.