Tag Archives: Discretionary Accruals

The Relationship between CEO Dualities, Directors’ Independence and Discretionary Accruals in the Nigerian Industrial Goods Companies (Published)

Separation of the two positions of CEO and Chairman as well as number of independent directors included in the board are important governance mechanisms that affect companies’ reported earnings, as requested by the code of governance due to the fact that managers are attempting to manipulate the earnings in order to meet their personal objectives. The objective of this study is to examine the relationship between CEO- duality, directors’ independence and discretionary accruals in the Nigerian industrial goods companies. A total of 24 companies in the industrial goods sector of the Nigerian stock exchange were analyzed using multiple linear regressions. Data was obtained from secondary sources alone using annual report and account of the companies for the periods of 2011 to 2014, using SPSS version 22. The results show that CEO-dualities is are significantly related to discretionary accruals, the result further suggests that holding two position by one person is not efficient in minimizing the possibility of managing earnings, therefore it is recommended that the, two position should be separated to minimize the likelihood of managing discretionary accruals practice, also, the study recommends more independent directors to be included on board, as it is capable of minimizing the tendency of manipulating accruals.

Keywords: CEO duality, Directors’ Independence, Discretionary Accruals


: The objective of this study is to investigate the effects of changes from Malaysia and Nigeria previous accounting standards to IFRSs-based standards on earnings management of Malaysia and Nigeria banks. Limited studies on the association between IFRS and earnings management in emerging economies and the continuous exclusion of financial institutions from samples of prior studies motivated this study to acquire the banking sector of two emerging countries – Malaysia and Nigeria in order to investigate whether changes in Malaysia and Nigeria accounting standards affects earnings management activities. Hence, this study used a sample of 23 banks representing 8 Malaysian banks and 15 Nigerian banks for a study period of 4 years (2009-2012). This study modified the Jones (1991) model to investigate earnings management in the banking sector. The modified Jones model is able to investigate earnings management in the banking sector. MFRSs and IFRSs impact more significantly and positively on the quality of accounting information of banks than the previous FRSs and SASs respectively for Malaysia and Nigeria. Specifically, the accrual and earnings quality of Nigerian banks has improved by approximately 41% and Malaysia banks 12.6% during the IFRSs/MFRSs adoption era. This study therefore recommends that globally, IFRSs should be adopted as the standard for the preparation and reporting of financial statements

Keywords: Accounting Standards, Discretionary Accruals, Earnings Management, Ifrss, Jones Model, Mfrss, Non-Discretionary Accruals, Total Accruals