Ceo Characteristics and Earning Management of Listed Consumer Goods Firms in Nigeria, Moderated by Audit Quality

Umar Muhammad, Marvis Irom Irom, Joshua Samuel Gambo and Mohd Rozilee Wazir Norjali Wazir
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Umar Muhammad: Department of Accounting, Nigerian Defence Academy, Kaduna
Marvis Irom Irom: Department of Accounting, Nigerian Defence Academy, Kaduna
Joshua Samuel Gambo: Department of Accounting, Nigerian Defence Academy, Kaduna
Mohd Rozilee Wazir Norjali Wazir: Faculty of Psychology and Education, Universiti Malaysia Sabah

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 3s, 2598-2615

Abstract: This study examined the moderating role of audit quality on the nexus between CEO characteristics and earnings management of listed consumer goods firms in Nigeria. The ex-post facto research design was adopted and secondary data were extracted from the annual reports of the listed consumer goods firms in Nigeria. The population of the study consists of twenty-one (21) companies and the sample size of twenty (20) companies was arrived at, using filtering technique. This study covered a period of 10 years from (2014-2023). Multiple regression analysis was employed in analyzing the data collected. CEO reputation was found to be a significant positive predictor of earnings management. Conversely, CEO age did not have a significant effect on earnings management. The study also found that audit quality significantly moderates the effect of CEO reputation on earnings management. However, audit quality had no significant moderating effect on the relationship between either CEO age or CEO financial expertise and earnings management. The study concluded that High-reputation CEOs are more likely to engage in earnings management, while those with financial expertise are less likely to do so. While higher audit quality might indicate complex financial reporting, it also suggests a potential for more aggressive earnings management. However, strong audits such as the Big4 firms can mitigate the impact of reputation on earnings manipulation. Larger firms tend to have higher levels of earnings management due to operational complexities. The study recommends that firms should focus on hiring or developing CEOs with strong financial expertise which would mitigate earnings management. This study further recommends that companies (consumer goods firms) should invest in high-quality audits to strengthen financial reporting and reduce earnings manipulation risks.

Date: 2025
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