Financial Reporting Quality and Earnings Management of Listed Consumer Goods Firms in Nigeria

ABSTRACT This study is to examine “Financial Reporting Quality and Earnings Management of Listed Consumer Goods Firms in Nigeria”. The study was prompted to examine impact of firm size and financial reporting quality of listed consumer goods firms in Nigeria; impact of firm performance and financial reporting quality of listed consumer goods firms in Nigeria; and impact of assets tangibility and financial reporting quality of listed consumer goods firms in Nigeria. Three (3) research questions were formulated to obtain data for the study. The population for the study was twenty-one (21) listed consumer goods firms and sample size was fifteen (15). Secondary source of data was the method used in gathering data which is the financial statement of the sampled listed consumer goods firms under review. The findings revealed that the study therefore infers that assets tangible is a significant determinant of financial reporting quality in the listed consumer goods firms in Nigeria during the period covered by the study. It was concluded that the study concludes after controlling for corporate governance that firm size, leverage, assets tangibility and firm performance have significantly impacted on the financial reporting quality of the listed consumer goods companies in Nigeria during the period covered by the study. The study also concludes that firm performance of the listed consumer goods firm have a significant negative impact on the financial reporting quality; while firm size of the listed consumer goods firms has a significant negative impact on the financial reporting quality. It was recommended that the regulators, auditors and financial analysts should take into account firm size, firm growth and tangible assets when making decision to address the problem of earnings management in the listed food and beverages firms in Nigeria; that managements of listed consumer goods firms should make policies towards optimal debt level in their capital structure; that the regulators should make policies with regard earnings management in relation to size of the firms and in terms of the effectiveness of the corporate governance mechanisms of the firms; and Auditors in the listed consumer goods firms should thoroughly investigate growing firms when auditing them, and ensure that the revenue levels are accordance with the economic realities of the firms.