DOES EARNINGS MANAGEMENT AFFECT DIVIDEND POLICY? EVIDENCE FROM QUOTED DIVERSIFIED CONGLOMERATE COMPANIES IN NIGERIA

Fodio M. I., Musa Hassan and Mamman Suleiman
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Fodio M. I.: Nasarawa State University, Keffi, Postal: Department of Accounting, Nigeria, http://www.icanig.org
Musa Hassan: Nasarawa State University, Keffi, Postal: Department of Accounting, Nigeria, http://www.icanig.org
Mamman Suleiman: Nasarawa State University, Keffi, Postal: Department of Accounting, Nigeria, http://www.icanig.org

International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), 2020, vol. 09, issue 2, 30-45

Abstract: Earnings management is one of the accounting tools employed by managers in order to manipulate the earnings of their companies through the utilization of accounting choices and discretionary accruals. Extant literature posits that different dividend policies tend to have varying effect on earnings management. Prior studies have provided contradictory and conflicting results on the association between earnings management and dividend policy. This study therefore examines whether earnings management affects dividend policy of listed diversified conglomerate companies in Nigeria. The study adopts correlational research design. Secondary data for the study was extracted from the companies' annual reports and accounts. There are six diversified conglomerate companies listed on the Nigerian Stock Exchange as at 31st December 2017. The study took a census approach of all the six listed diversified conglomerate companies over the study period, 2008-2017. Panel regression technique was employed in analyzing the data collected for the purpose of the study. Results revealed that earnings management significantly but negatively affect dividend policy of Nigerian quoted diversified conglomerate companies. In line with the findings, the study recommends that investors whose primary motive is dividend should focus their investment more on quoted diversified conglomerate companies as their earnings is free from earnings manipulation.

Keywords: Earnings Management; Discretionary Accruals; Dividend Policy (search for similar items in EconPapers)
Date: 2020
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