Effect of Corporate Governance on Earnings Management in Nigeria: Evidence from Listed Manufacturing Firms

Abstract

This study investigates the impact of corporate governance on the earning management of the listed manufacturing firms in Nigeria utilizing annual time series data covering the duration of 2013 to 2023. The data was derived from 36 selected listed manufacturing firms in Nigeria, and the panel autoregressive distributed lag model (ARDL) was used as the standard model. In addition, the generalized method of moment (GMM) was used as the model for the robustness check model. The earning management was measured with distortionary accruals. In contrast, corporate governance was measured with indicators such as the board size, board governance, and remuneration committees, the number of meetings held by the board, the number of stockholder committees, the number of remuneration committees, and the number of audit committees, and checked their effects on the earning management of the listed manufacturing firms in Nigeria. Findings from the result of the ARDL estimation show that corporate governance has important positive effects on the earning management of listed manufacturing firms in Nigeria. Similarly, we also found that corporate governance has significant positive effects on the earning management of listed manufacturing firms in Nigeria based on the results of the GMM robustness checks. Finally, this study found that corporate governance has a significant positive impact on the earnings management of the listed manufacturing firms in Nigeria. Established the study findings, this study advises that authorities should seek to make policies that would boost corporate governance and minimize earning management in Nigeria.