Earnings and Ownership Characteristics on Reported Earnings Quality of Listed Industrial Goods Companies in Nigeria

Dr. Ologhodo Johnbest Churchill, Dr. Ugbaje David Ojofedo and Dr. Nnamdi Chukwuto O
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Dr. Ologhodo Johnbest Churchill: Accounting Department, National Open University of Nigeria, Abuja, Nigeria.
Dr. Ugbaje David Ojofedo: Nasarawa State University, Keffi.
Dr. Nnamdi Chukwuto O: Accounting Department National Open University of Nigeria Abuja, Nigeria.

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 7, 339-357

Abstract: The study examined the effect of earnings and ownership characteristics on reported earnings quality of listed industrial goods companies in Nigeria, it adopted longitudinal research design, using secondary data collected from the annual financial statement of the sampled companies in Nigeria for a twelve-year period from 2011 to 2022. The study population is the 13 listed industrial companies, the same number of companies also served as the sample size of the study. Data collected were analyzed using the multiple linear regression model. The study made use of discretionary accruals as proxy for the dependent variable which is earnings quality and the independent variables for the study are cash-holding, liquidity, operating cycle, sales value, managerial ownership, ownership concentration, institutional ownership and foreign ownership. The result of the study showed thatcash-holding, liquidity, operating cycle, managerial ownership, has negative insignificant effect on reported earnings quality, ownership concentration and sales value reported positive insignificant relationship with reported earnings quality; sales value was seen to exert influence on the reported earnings, because it measures the operational effectiveness of the firm; while institutional and foreign ownership showed negative significant relationship with reported earnings quality. The result of the findings of this study compared to other studies revealed mixed outcome showing that result of studies can be influenced by data availability, research settings, the researchers’ perspectives and expectations and other factors. It is recommended that enough cash should be kept to quickly take advantage of emerging contingencies and to avoid pilferage and wastages, the industry average of liquidity must be strictly adhered to, and excess liquidity must be prudently invested in profitable ventures; short operating cycle should be maintained as far as possible for profitability, increase market share, and attain cost leadership, by providing attractive incentives to customers.

Date: 2024
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