CORPORATE ATTRIBUTES AND EARNINGS MANAGEMENT OF LISTED CONSUMER GOODS COMPANIES IN NIGERIA

Abstract

Firms require vital information to aid in crucial decision-making for actions and subsequent communicating companies’ economic performance to Managers and other stakeholders. Nevertheless, information found in firms' annual financial reports have persistently indicated gross suspicions and unreliability, and their vulnerability have caused damages beyond imagination. History has witnessed several accounting scandals perpetuated through the manipulation of the accounting figures reported in financial statements, leading to the questioning of the ability of the governance system to effectively limit such practices, especially in developing countries. Given the prominence of this problem, this study examined the relationship between corporate attributes (of firm size, leverage, audit fees and auditors’ industry specialization) and earnings management among quoted consumer goods companies in Nigeria. Earnings management proxied by discretionary accruals acted as dependent variable. Longitudinal research design was adopted, and included17 purposive sampled companies out of the 21 companies in the consumer goods sector, from which 10-year-period data were collected, covering 2011‒2020. The data were analysed using STATA version 16 software and multiple regression technique. Results revealed that firm size, audit fees and auditor industry specialization have a statistically positive significant effect on earnings management while financial leverage had no significant influence. Key recommendation is that companies, accounting regulators, Financial Reporting Council of Nigeria and indeed all stakeholders should consider an expanded approach in examining earnings management in Nigeria with critical attributes of firm size, audit fees and auditor industry specialization