Earnings management and corporate governance in nigeria pdf

Corporate governance, earnings management, discretionary accrual s, agency theory. The effect of earnings management on earnings and bookvalue per share. Sep 04, 2017 assessment of earnings management and corporate governance practices in nigeria. See below for the abstract, table of contents, list of figures, list of tables, list of appendices, list of abbreviations and chapter one. A case of nigerian manufacturing firms find, read and cite all the. The effect of corporate governance attributes on earnings management. The purpose of this study is to examine the relation between the internal. Corporate governance, earnings management and financial. Pdf the effect of earnings management on earnings and. To achieve the objectives of this study, a total of 40 listed firms in the nigerian stock exchange market were selected and analyzed for this study using the judgmental sampling technique. Due to the threat of recorded business failures arising from weak corporate governance and low financial reporting quality on the nigerian economy, this study investigates the effects of corporate governance variables on earnings management among selected listed firms from the manufacturing and banking sectors. Corporate governance, earnings management and tax management.

Companies around the world are realizing that better corporate governance adds. The aim of this study was to classify nigerian quoted companies into high and low earnings management levels and also to investigate how corporate governance mechanisms relate to these categories of earnings management levels. M41, m42 introduction the importance of corporate governance in the administration of companies cannot be overemphasized especially as it relates to earnings management. Accountants and financial economists have for long identified that corporate governance affects both financial performance and the opportunistic behaviour of managers.

Assessment of earnings management and corporate governance practices in nigeria with abstract, chapters 15, references and questionnaire. Brown and caylor 2004 found corporation with better corporate governance will have a better performance compare to corporation with worse corporate governance. The paper investigated the moderating role of internal audit on the relationship between corporate governance mechanisms and corporate performance roa and the direct effect of corporate governance characteristics and internal audit characteristics on corporate governance of firms. Some aspects of corporate governance mechanisms and earnings. Board ethnicity, gender diversity, earnings management, directors, nigeria. Due to the threat of recorded business failures arising from weak corporate governance and low financial reporting quality on the nigerian economy, this study investigates the effects of corporate governance variables on earnings management among selected listed firms from. To achieve the objectives of this study, a total of 40 listed firms in the nigerian stock exchange market were selected and analyzed for. Earnings management and corporate governance in nigeria by. Through whatever means this is an unethical practice. Earnings management creative accountingfinancial engineering as its being called is considered to be a deliberate attempt to arrive at a desired level of earnings using different means.

Studies on the influence of corporate governance mechanisms on firm performance often overlook the possibility that reported earnings can be misrepresented by managers in order to achieve a variety of objectives. Corporate governance and financial reporting quality in selected nigerian company onuorah, anastasia chichi phd, imene oghenefegha friday department of accounting, banking and finance, delta state university, asaba, delta state nigeria correspondent authors email. Earnings management, corporate governance, audit committee, ownership structure, board size. To determine the effect of board size on earnings per share of commercial banks in nigeria. This is due to its linkage with the reliability of published accounting reports. Our results provide evidence that effective boards and audit committees constrain earnings management activities. The cbn issued the code on the 24 october 2018 which came to effect on 1 april 2019. Assessment of earnings management and corporate governance.

This study contributes to the literature by providing a subsaharan african economy perspective on the relationship between corporate governance and earnings management, based on evidence produced. Effect of corporate governance on earnings management. Corporate governance and earning management of deposit money banks in nigeria by. A case of nigerian manufacturing firms shehu usman hassan department of accounting ahmadu bello university zaria, nigeria. Corporate governance, firm size, and earning management. An appraisal of corporate governance mechanisms and earnings management in nigeria ensure that the management properly utilize the enterprises affairs of. Earnings management earnings management occur when management make an accounting decisions that change bottom line of corporation and distorting the application of generally.

Effect of corporate governance on earnings management of. The code of best governance practice in nigeria requires that. The study on corporate governance and earnings management in nigeria banking industry will be of immense benefit to the entire banking industryin portharcourt and other researcher that wishes to carry out similar research on the above topic as it will educate the entire firms on the importance corporate governance and management of earnings in. Using two groups of us firms, one with relatively high and one with relatively low levels of discretionary accruals in the year 1996, we find that earnings management is significantly associated with some of the governance practices by audit. Corporate governance, earnings management, discretionary accruals, agency theory. In a september 1998 speech to lawyers and cpas, arthur levitt, chairman of the security exchange commission committed the sec in no uncertain terms to a serious, highpriority attack on earnings management loomis, 1999, p. Corporate governance and financial reporting quality in. Abubakar ahmed department of accountancy federal polytechnic, bali taraba state, nigeria. The study on corporate governance and earnings management in nigeria banking industry will be of immense benefit to the entire banking industry in portharcourt and other researcher that wishes to carry out similar research on the above topic as it will educate the entire firms on the importance corporate governance and management of earnings in. Corporate governance impacts on earnings management in most commercial banks in nigeria. This study examines the effect of corporate governance on earnings.

Corporate governance and accounting ethics in nigeria by. The recommendation is that there is a need to focus on building effective corporate governance to mitigate the proclivity for earnings management in the banking sector. Investors and other interested parties such as shareholders. Download the complete accounting project topic and material chapter 15 titled effect of corporate governance on earnings management practices of nigeria quoted companies 20102015 here on projects. Download this complete banking and finance project material titled. Pdf corporate governance mechanisms, sensitive factors. Issn 22221697 paper issn 22222847 onlinevol 3, no 3, 2012earnings management and corporate governance in nigeria olayinka marte uadiale department of accounting, university of lagos, lagos state, nigeria email. According to the central bank of nigeria cbn, corporate governance refers to the processes by which activities of an institution. The effects of corporate governance mechanisms on earnings. Board dynamics and financial reporting quality in nigeria. Corporate governance, nigeria, africa, firm performance. It was not true that corporate governance does not impacts on earnings management in commercial banks in nigeria. We examine the role of the board of directors, the audit committee, and the executive committee in preventing earnings management.

Earnings management and corporate governance in nigeria banking industry with abstract, chapter 15, references and questionnaire. Earnings management and corporate governance in nigeria banking industry includes abstract and chapter one, complete project material available earnings management and corporate governance in nigeria banking industry abstract this paper studies the relationship between different corporate governances mechanisms and earnings management. The effects of corporate governance mechanisms on earnings management of listed firms in nigeria uwalomw a uwuigbe a, 1, daramola sunday peter b and anjolaoluwa oyeniyi a c o v e n a n t uni versity, nigeria. Earnings management and corporate governance in nigeria earnings management has received considerable attention in recent times. While corporate governance essentially lays down the framework for creating longterm trust between companies and the external providers of capital, it would be wrong to think that the importance of corporate governance lies solely in better access of finance. This study basically examined the effects of corporate governance mechanism on earnings management in nigeria. This study primarily aimed to assess the internal audit functions ability to detect and selfreport fraud. Corporate governance and financial performance of nigeria listed banks. Some aspects of corporate governance mechanisms and. This paper examines the issues and challenges around corporate governance. International journal of economics, commerce and management, united kingdom licensed under creative common page 79 introduction board of directors as an organ of the firm is instituted to ensure good corporate governance.

Apr 26, 20 although us and european research has documented improvement in earnings quality associated with corporate governance characteristics, the situation in latin america is questionable, given the business environment in which firms operate, which is characterized by controlling family ownership and weak legal protection. The code of corporate governance code 2011 in nigeria was ushered with a target to enhance the monitoring function of board of directors and audit committees. There is relationship between different corporate governance mechanism and earnings management of commercial banks in nigeria. Hassan and others published corporate governance, earnings management and financial performance. Earnings management and corporate governance citeseerx.

Supporting an sec panel reports conclusion that audit committee members need financial sophistication, we show that the composition of a board in general and of an audit committee more specifically, is related to the likelihood that a firm will engage. Normally, an institutional environment that provides better legal protection can control managers self. The study shows that there is a negative significant relationship between board size, gender, and board composition with earnings management. This study investigates the ability of certain board dynamics to influence management attitude in relation to reporting quality in nigerian listed firms. Paper presented at the conference on corporate governance, accra, ghana, 29 30 january, 2001. This study seeks to explore the influence of corporate governance and earnings management practices in nigerian quoted companies. A study of listed companies in nigeria article pdf available in academy of strategic management journal 176.

Pdf the effect of corporate governance attributes on. The banking industry in nigeria will find the research findings or report useful in decisions making. This paper examines the issues and challenges around corporate governance in the nigerian banking industry. Corporate governance corporate governance is represented by board of director, audit quality, and board independence. Earnings management vs financial reporting fraud key features for distinguishing 43 ing whether or when such behavior in the earnings management crosses the line of legitimacy to fraud, in some situations, is not always easy owing to a number of different reasons.

Corporate governance, earnings management, insurance. An appraisal of corporate governance mechanisms and earnings management in nigeria. Corporate governance, earnings management and financial performance. Corporate governance in nigeria1 nigerian law guru. Pdf corporate governance and earnings management kamau. Alrahahleh 3 abstract this paper investigates the effect of corporate governance quality on earnings management in. To achieve the objectives of this study, a total of 40 listed firms in the nigerian stock exchange market were.

This study investigated the effects of corporate governance mechanisms, sensitive factors on earnings management of quoted oil and gas firms in nigeria using the sample of nine 9 listed oil and. Previous studies have used board size as a determinant of earnings management, but. There is a significant negative between firm size and earning management. Earnings management has recently received considerable attention by regulators and the popular press. Pdf corporate governance, earnings management and financial. Corporate governance continues to be an area of importance while earnings management still appears to be a problematic issue.

Ademola oyejide and adedoyin soyibo development policy centre ibadan, nigeria. The goal of this paper is to metaanalyze the results of 35 studies that examine the effect on earnings management of. Earnings management may be defined as reasonable and legal management decision making and reporting intended to achieve stable and predictable financial results. In the banking sector good corporate governance practices are regarded as important in reducing risk for investors, attracting investment capital and improving the performance of companies.

Corporate governance refers to a system of creating an appropriate balance between the interest of a companys management, shareholders, customers, suppliers, the government and other stakeholders. We evaluate the standard of corporate governance in nigeria using the oecd scoring instrument in. Boards of directors can play a significant role in control inagency problems garciameca and sancesbalesta, 2009. Corporate governance and earnings management by sonda. Abubakar ahmed department of accountancy federal polytechnic, bali taraba state, nigeria abstract. The audit of a companys accounts is a monitoring or control apparatus that minimizes information asymmetry and protects the interests of the principal. Pdf corporate governance and management of earnings.

Jun 29, 2001 we also find that larger board, the importance of the ownership stakes in the firm held by nonexecutive directors, and experience as board members seems to reduce income decreasing earnings management. Earnings management has received considerable attention in recent times. Department of accounting, federal university of agriculture, abeokuta. Keywords board of directors corporate governance corruption discretionary accruals ownership structure introduction in recent years large accounting fraud uncovered in the stock markets has once again con. Corporate goverance determinants of earnings management. This study basically examined the effects of corporate governance. Pdf an appraisal of corporate governance mechanisms and. Pdf corporate governance and financial performance of. Abstract the issue of corporate governance has crept into the business world and the banking industry is. Corporate governance quality and earnings management.

Earnings management and corporate governance in nigeria olayinka marte uadiale department of accounting, university of lagos, lagos state, nigeria email. Corporate governance mechanisms and earnings management in nigerian food product companies. Corporate governance can reduce or even eliminate the extent of earnings management. Gender diversity, earnings management, corporate performance, female membership, financial performance introduction over the last few years, the issue of corporate governance has raised a series of arguments among scholars and the need for an effective system of governance has remained a major. A sample of 24 listed companies from the 2 sectors population of 63 was examined. Does the possession of certain level of financial competencies by audit committee members affect earnings management in nigeria. Pdf the influence of corporate governance on earnings.

In order to achieve the above stated objective, the following specific objectives were developed. Earnings management is not to be confused with illegal activities to manipulate financial statements and report results that do not reflect economic. Earnings management however, the relationship is statistically insignificance at 5% level. The study examines the relationship between corporate governance mechanisms and accounting ethics in nigeria. Does corporate governance influence earnings management in. The main objective of this study is to examine the effect of earnings.