Corporate Characteristics And The Level Of Earnings Management In The Industrial Goods Sector In Nigeria
DOI:
https://doi.org/10.31150/ajebm.v4i9.605Keywords:
Company Size, Leverage, Return on Assets, Asset TurnoverAbstract
The study examined whether corporate characteristics had significant effect on the level of earnings management in the industrial goods sector in Nigeria. In this study, company size, return on asset and leverage are the dimensions of the independent variable. The level of earnings management is measured by using a discretionary accruals estimation method: the Modified Jones model and Asset turnover margin diagnostics. This effect was examined by employing a multiple regression model using a sample of 14 firms in the industrial goods sector listed on Nigeria stock exchange (NSE) from 2009 - 2019. The results suggest that industrial goods sector in Nigeria context shows that the level of earnings management is not directly affected by company characteristics except leverage. This could imply that audit firms should improve their performance and that regulatory agencies should improve their supervision in order to enhance audit quality and restrain earnings management. Although prior (international) research predominantly does show significance, the absence of significance in this study could be explained by the relatively small sample size or the context in which the study takes place. It is recommended Forensic auditing has intensive expert power to detecting fraud committed by doctoring the earnings worth of a firm, thus small audit firms should go the field with forensic experts to double check assurance work.
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