ACCOUNTING CHOICE AND EARNINGS QUALITY OF THE NIGERIAN OIL AND GAS INDUSTRY

Abstract

This work studied the effect of accounting method choice on earnings quality in the Nigerian oil and gas industry. Specific objectives of the study included: to determine the effect of full cost and successful efforts accounting methods on earnings predictability, earnings persistence and earnings variability. Secondary were obtained from the director’s reports of annual financial statements of sampled companies. The ex-post facto research design was adopted to determine the effect for 8 oil and gas companies purposively selected for the period of 2006-2020. The panel regression model estimation technique was employed using the STATA computer software version 16.0 for statistical analysis. Findings revealed that full cost method of accounting had negative significant effect on earnings predictability, earnings persistence and variability while successful efforts method of accounting had positive insignificant effect on all dependent variable. It was recommended that managers of companies in the Nigerian oil and gas industry should adopt full cost method of accounting for their operations if higher earnings quality is to be achieved.