The effect of corporate governance and firm characteristics on earnings management practice among Nigerian companies

The effect of corporate governance and firm characteristics on earnings management practice among Nigerian companies

Earnings management has become an avenue for the managers to report determined corporate performance which later led to the collapse of the corporations. Corporate governance mechanisms instituted to control the managers’ opportunistic action which reduces agency cost of the firms. The present study...

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Main Author: Miko, Nuraddeen Usman
Format: Thesis
Language:eng
eng
Published: 2016
Subjects:
HD2709-2930.7 Corporations
HD58.9 Organizational Effectiveness.
Online Access:https://etd.uum.edu.my/7726/1/s95225_01.pdf
https://etd.uum.edu.my/7726/2/s95225_02.pdf
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institution Universiti Utara Malaysia
collection UUM ETD
language eng
eng
advisor Kamardin, Hasnah
topic HD2709-2930.7 Corporations
HD58.9 Organizational Effectiveness.
spellingShingle HD2709-2930.7 Corporations
HD58.9 Organizational Effectiveness.
Miko, Nuraddeen Usman
The effect of corporate governance and firm characteristics on earnings management practice among Nigerian companies
description Earnings management has become an avenue for the managers to report determined corporate performance which later led to the collapse of the corporations. Corporate governance mechanisms instituted to control the managers’ opportunistic action which reduces agency cost of the firms. The present study investigates the relationship between the board of directors, audit committee and firm characteristics and earnings management practice in Nigerian listed companies. The study also investigates the earnings management practice in the pre- and post-Corporate Governance Code 2011 periods. The study argues that interaction of institutional ownership between audit committee and earnings management practice mitigates opportunistic behaviors of managers. The study measured the effectiveness of the revised Nigerian Corporate Governance Code 2011 mechanisms which came into effect in 2011. Data were gathered from 405 non-financial company-year observations drawn from the population of Nigerian listed companies for the period of 2009-2013. With reference to the agency theory, political cost theory and ethical theory, the present study finds that the revised Corporate Governance Code 2011 has a significant effect in reducing the level of earnings management practice in the post Corporate Governance Code 2011 period; corporate governance mechanisms significantly reduce earnings management practice; and institutional ownership interaction effect in the audit committee is significantly more active in reducing earnings management. Based on the findings, the study suggests that for future policy effective corporate governance is required to mitigate earnings management activities. The regulators need to encourage participation of institutional ownership in the board of public listed companies.
format Thesis
qualification_name Ph.D.
qualification_level Doctorate
author Miko, Nuraddeen Usman
author_facet Miko, Nuraddeen Usman
author_sort Miko, Nuraddeen Usman
title The effect of corporate governance and firm characteristics on earnings management practice among Nigerian companies
title_short The effect of corporate governance and firm characteristics on earnings management practice among Nigerian companies
title_full The effect of corporate governance and firm characteristics on earnings management practice among Nigerian companies
title_fullStr The effect of corporate governance and firm characteristics on earnings management practice among Nigerian companies
title_full_unstemmed The effect of corporate governance and firm characteristics on earnings management practice among Nigerian companies
title_sort effect of corporate governance and firm characteristics on earnings management practice among nigerian companies
granting_institution Universiti Utara Malaysia
granting_department Othman Yeop Abdullah Graduate School of Business
publishDate 2016
url https://etd.uum.edu.my/7726/1/s95225_01.pdf
https://etd.uum.edu.my/7726/2/s95225_02.pdf
_version_ 1747828254363877376
spelling my-uum-etd.77262021-04-06T06:28:06Z The effect of corporate governance and firm characteristics on earnings management practice among Nigerian companies 2016 Miko, Nuraddeen Usman Kamardin, Hasnah Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HD2709-2930.7 Corporations HD58.9 Organizational Effectiveness. Earnings management has become an avenue for the managers to report determined corporate performance which later led to the collapse of the corporations. Corporate governance mechanisms instituted to control the managers’ opportunistic action which reduces agency cost of the firms. The present study investigates the relationship between the board of directors, audit committee and firm characteristics and earnings management practice in Nigerian listed companies. The study also investigates the earnings management practice in the pre- and post-Corporate Governance Code 2011 periods. The study argues that interaction of institutional ownership between audit committee and earnings management practice mitigates opportunistic behaviors of managers. The study measured the effectiveness of the revised Nigerian Corporate Governance Code 2011 mechanisms which came into effect in 2011. Data were gathered from 405 non-financial company-year observations drawn from the population of Nigerian listed companies for the period of 2009-2013. With reference to the agency theory, political cost theory and ethical theory, the present study finds that the revised Corporate Governance Code 2011 has a significant effect in reducing the level of earnings management practice in the post Corporate Governance Code 2011 period; corporate governance mechanisms significantly reduce earnings management practice; and institutional ownership interaction effect in the audit committee is significantly more active in reducing earnings management. Based on the findings, the study suggests that for future policy effective corporate governance is required to mitigate earnings management activities. The regulators need to encourage participation of institutional ownership in the board of public listed companies. 2016 Thesis https://etd.uum.edu.my/7726/ https://etd.uum.edu.my/7726/1/s95225_01.pdf text eng public https://etd.uum.edu.my/7726/2/s95225_02.pdf text eng public https://sierra.uum.edu.my/record=b1698409~S1 Ph.D. doctoral Universiti Utara Malaysia Abarbanell, J., & Lehavy, R. (2003). Can stock recommendations predict earnings management and analysts’ earnings forecast errors? Journal of Accounting Research, 41(1), 1–31. doi:10.1111/1475-679X.00093 Abbott, L. J., Parke, S., & Peters, G. F. (2004). Audit committee characteristics and restatements. AUDITING: A Journal of Practice & Theory, 23(1), 69–87. Abbott, L. J., Parker, S., Peters, G. F., & Raghunandan, K. (2003). The Association between Audit Committee Characteristics and Audit Fees. AUDITING: A Journal of Practice & Theory, 22(2), 17–32. doi:10.2308/aud.2003.22.2.17 Abdullah, S., & Nasir, N. (2004). Accrual management and the independence of the boards of directors and audit committees. Journal of Economics and Management, 12(1). Retrieved from http://www.iium.edu.my/enmjournal/index.php/enmj/article/view/97 Abdul-Latif, R., Kamardin, H., Taufil Mohd, N. N. K., & Che Adam, N. (2013). Multiple directorships, board characteristics and firm performance in Malaysia. Management, 3(2), 105–111. doi:10.5923/j.mm.20130302.07 Adelegan, O. J. (2009). Does corporate leadership matter? Evidence from Nigeria. Research Papers. Retrieved from http://ideas.repec.org/p/aer/rpaper/rp_189.html Agrawal, A., & Chadha, S. (2005). Corporate governance and accounting scandals. Journal of Law and Economics, 48(2). Ajibolade, S. (2008). A survey of the perception of Ethical Behaviour of future Nigerian Accounting Professionals. The Nigerian Accountant. Retrieved from http://scholar.google.com.my/scholar?hl=en&q=A+Survey+of+the+Perception+of+Ethical+Behaviour+of+Future+Nigerian+Accounting+Professionals&btnG=&as_sdt=1,5&as_sdtp=#0 Akhigbe, A., & Martin, A. D. (2006). Valuation impact of Sarbanes–Oxley: Evidence from disclosure and governance within the financial services industry. Journal of Banking & Finance, 30(3), 989–1006. doi:10.1016/j.jbankfin.2005.06.002 Akhtaruddin, M., & Haron, H. (2010). Board ownership, audit committees’ effectiveness and corporate voluntary disclosures. Asian Review of Accounting, 18(1), 68–82. doi:10.1108/13217341011046015 Al-fayoumi, N., & Alexander, D. (2010). Ownership structure and earnings management in emerging markets: The case of Jordan. Journal of Finance and Economics, 38. Ali, A., & Zhang, W. (2015). CEO tenure and earnings management. Journal of Accounting and Economics, 59, 60–79. Aljifri, K. (2007). Measurement and motivations of earnings management: A critical perspective. Journal of Accounting, Business & Management. Retrieved from http://scholar.google.com.my/scholar?q=Measurement+and+motivations+of+earnings+management:A+critical+perspective&btnG=&hl=en&as_sdt=0,5#0 Al-Khabash, A. A., & Al-Thuneibat, A. A. (2009). Earnings management practices from the perspective of external and internal auditors: Evidence from Jordan. Managerial Auditing Journal, 24(1), 58–80. doi:10.1108/02686900910919901 Allen, E. J., Larson, C. R., & Sloan, R. G. (2013). Accrual reversals, earnings and stock returns. Journal of Accounting and Economics, 56(1), 113–129. doi:10.1016/j.jacceco.2013.05.002 Amidu, M., & Abor, J. (2006). Determinants of dividend payout ratios in Ghana. Journal of Risk Finance, 7(2), 136–145. Retrieved from http://www.emeraldinsight.com/journals.htm?articleid=1541825&show=abstract Anderson, C., & Anthony, R. (1986). The new corporate directors: Insights for board members and executives. Retrieved from http://www.getcited.org/pub/102529450 Anderson, K. L., Deli, D. N., & Gillan, S. L. (2003). Boards of directors, audit committees, and the information content of earnings. Anderson, R. C., Mansi, S. A., & Reeb, D. M. (2004). Board characteristics, accounting report integrity, and the cost of debt. Journal of Accounting and Economics, 37(3), 315–342. doi:10.1016/j.jacceco.2004.01.004 Anil, K., & Kapoor, S. (2008). Determinants of dividend payout ratios: A study of Indian information technology sector. International Research Journal of Finance and Economic, 15, 63–71. Retrieved from http://scholar.google.com.my/scholar?q=Determinants+of+dividend+payout +ratios+-+a+study+of+Indian+information+technology+sector&btnG=&hl=en&as_sdt=0,5#0 Archambeault, D. (2002). The relation between corporate governance strength and fraudulent financial reporting: Evidence from SEC enforcement cases. New York. 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AUDITING: A Journal of Practice & Theory, 22(2), 17–32. doi:10.2308/aud.2003.22.2.17 Abdullah, S., & Nasir, N. (2004). Accrual management and the independence of the boards of directors and audit committees. Journal of Economics and Management, 12(1). Retrieved from http://www.iium.edu.my/enmjournal/index.php/enmj/article/view/97 Abdul-Latif, R., Kamardin, H., Taufil Mohd, N. N. K., & Che Adam, N. (2013). Multiple directorships, board characteristics and firm performance in Malaysia. Management, 3(2), 105–111. doi:10.5923/j.mm.20130302.07 Adelegan, O. J. (2009). Does corporate leadership matter? Evidence from Nigeria. Research Papers. Retrieved from http://ideas.repec.org/p/aer/rpaper/rp_189.html Agrawal, A., & Chadha, S. (2005). Corporate governance and accounting scandals. Journal of Law and Economics, 48(2). Ajibolade, S. (2008). A survey of the perception of Ethical Behaviour of future Nigerian Accounting Professionals. The Nigerian Accountant. 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