Sustainability Reporting and Earnings Management of Listed Non-Financial Firms in Nigeria

Olagunju Adebayo (), Adenle Oluwatimileyin Esther (), Obademi Olalekan, Obiosa Ruth Tony and Akinola Amos Olusola
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Olagunju Adebayo: Department of Accounting, Osun State University, Osogbo, Nigeria
Adenle Oluwatimileyin Esther: Department of Accounting, Osun State University, Osogbo, Nigeria
Obademi Olalekan: Department of Finance, University of Lagos, Nigeria
Obiosa Ruth Tony: Department of Accounting, Rivers State University, Portharcourt, Nigeria
Akinola Amos Olusola: Department of Accounting, Osun State University, Osogbo, Nigeria

Research Papers Faculty of Materials Science and Technology Slovak University of Technology, 2023, vol. 31, issue 52, 68-83

Abstract: The effects of sustainability reporting on earnings management was examined in the study extensively. Causal research design was employed in this study. The study population comprises of all the 112 quoted non-financial firms in Nigeria, sample size is 22 listed manufacturing firms purposively selected for the purpose of this study. The study covered 7 years’ period ranging from 2015-2021. The data used for this study were gotten from the annual reports and sustainability reports of the selected firms. Data used for this study were analyzed with the use of descriptive statistics and panel regression analysis. Sustainability reporting was measured in this study by using the social, economic and environmental disclosures index, whereas earnings management was measured using discretionary accrual and real earning. The outcome of the analysis of the study revealed that sustainability reporting has a significant negative effect on discretionary accruals and real earnings evidenced by t-statistics = (-2.31, -2.54, -2.95) and p-values of (0.037, 0.018 and 0.023) respectively for social, environmental and economic report disclosures on discretionary accruals and t-statistics of = (-2.53, -2.23, -2.86) and p-values of (0.012, 0.029 and 0.005) respectively for social, environmental and economic report disclosures on real earnings. The study concludes that the firms with low sustainability disclosure will probably be more involved in earnings management practices than the firms who actively disclosed their sustainability matters in details. The study recommends that firms should ensure they disclose in details the true state of their sustainability activities.

Keywords: Discretionary Accruals; Earnings Management; Economic disclosures; Environmental disclosures; Social disclosure (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:repfms:v:31:y:2023:i:52:p:68-83:n:4

DOI: 10.2478/rput-2023-0008

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