European Journal of Accounting, Auditing and Finance Research (EJAAFR)

EA Journals

Accounting Manipulations and Firms Financial Performance: Evidence from Nigeria

Abstract

The study examined accounting manipulations using timing of assets (independent variable) and firm’s financial performance (dependent variable) using Return on assets, Return on Equity and Earnings per share based on Secondary data obtained from Nigeria stock exchange and tries to ascertain whether firms use TAT to manipulate financial results .TATs were subjected to Hausmann test and also regressed against performance variable.. Findings indicate that TAT have significant relationships with ROA, ROE and EPS implying it could be used for accounting manipulations. The Study confirmed a positive relationship of TAT with ROA and EPS and we conclude that an increase in TAT increases ROA and EPS. Conversely, TAT also has a negative relationship with ROE confirming that a decrease in TAT increases ROE and vice versa.  Managers can deploy TAT for economic or accounting manipulation incentives. Study confirm Managers can use TAT to smooth earnings, for bonus compensation, for debt covenants and for political costs reasons in line with the various hypothesis stated in the theoretical framework. However, this finding draws out the inherent disadvantage of the historical cost convention and supports market value as a basis for valuation of assets. We recommend regulators overhaul of corporate governance mechanisms, amendment of CAMA 2004 Act, internal audit empowerment and audit committees extensive attention to Timing of assets sales to prevent usage for manipulative activities

Keywords: Earnings per share, Returns On Asset, Returns on Equity, Timing of Asset Sales

cc logo

This work by European American Journals is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 4.0 Unported License

 

Recent Publications

Email ID: editor.ejaafr@ea-journals.org
Impact Factor: 7.77
Print ISSN: 2053-4086
Online ISSN: 2053-4094
DOI: https://doi.org/10.37745/ejaafr.2013

Author Guidelines
Submit Papers
Review Status

 

Scroll to Top

Don't miss any Call For Paper update from EA Journals

Fill up the form below and get notified everytime we call for new submissions for our journals.