Effect of Culture on Financial Reporting Quality of Listed Conglomerate Companies in Nigeria

Abstract

This study examines the effect of cultural dimensions; uncertainty avoidance, long-term orientation, and organizational culture on the financial reporting quality (FRQ) of listed conglomerate companies in Nigeria. The study adopts an ex post facto research design using panel data from six listed conglomerate firms over a ten-year period (2015–2024), resulting in 60 firm year observations. Data were analyzed using panel regression techniques, including pooled OLS, fixed effects, and random effects models, with the Hausman test confirming the suitability of the random effects model. Robust estimation techniques were employed to address heteroskedasticity and serial correlation issues. The findings revealed that uncertainty avoidance has a positive and statistically significant effect on financial reporting quality, indicating that risk-averse environments enhance reporting reliability and transparency. Organizational culture also exhibits a positive and significant effect, suggesting that firms with strong ethical, adaptive, and transparent cultures produce higher quality financial reports. However, long-term orientation shows a positive but statistically insignificant relationship with financial reporting quality, implying that its influence is context-dependent and not sufficiently strong within the study period. The study concludes that while national cultural dimensions contribute to financial reporting practices, organizational culture is the most influential factor in improving financial reporting quality among listed conglomerate companies in Nigeria. The study recommends strengthening internal control systems, promoting ethical corporate cultures, integrating long-term reporting strategies, and enhancing regulatory oversight to improve reporting quality.