An analysis of firm performance and real earnings management of listed cement firms in Nigeria

Abstract

This study investigates the effect of firm characteristics (proxied by profitability and leverage) on earning management of listed cement firms in Nigeria. Secondary data on earnings management (proxied by real discretionary accrual) profitability (measured by return on asset), leverage (measured by ratio of liabilities to total asset. Data was sourced from annual financial statement of selected cement firms in Nigeria over the period of 2014 and 2021. Data collected were analysed using panel least square estimation technique and findings of the study indicates that firm profitability (PERF) has a negative and significant effect on earnings management of listed cement firms in Nigeria, leverage (LEV) exerts a positive and insignificant effect on earnings management of listed cement firms in Nigeria. Since findings from the study revealed that firm profitability has a negative and significant effect on earnings management of listed cement firms in Nigeria which indicates that firm profitability mitigates earnings management of listed cement firms in Nigeria, it is therefore recommended that listed cement firms should increase the level of their efficiency by expanding their business through expansion of production lines so as to make more profit in order to reduce the level of discretionary accruals manipulation in the organizations.