Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria

Ubesie Madubuko Cyril; Nwankwo Bobby Godwin Ogbogu; Nwankwo Peter Emeka

doi:doi:10.11648/j.jfa.20200801.15

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Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria

Ubesie Madubuko Cyril, Nwankwo Bobby Godwin Ogbogu, Nwankwo Peter Emeka

Published in Journal of Finance and Accounting (Volume 8, Issue 1)

Received: 7 January 2020 Accepted: 18 January 2020 Published: 14 February 2020

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Abstract

There are two different tools of earnings management; real activities and accruals. Prior research shows that the discussion on earnings management was primarily focused on accrual manipulation strategies while recently many articles have focused on real activity manipulation as a proxy for earnings management. In accrual manipulation, managers introduce their judgment and subjectivity by accounting choices in the financial reports, and hence it could distort a company’s underlying operating performance. The main objective of this study was to determine the impact of Earnings Management on financial performance of consumer goods firms in Nigeria. The study adopted the ex-post facto research design and used simple regression analysis for analysing the pooled secondary data obtained from three selected consumer goods firms in Nigeria. The dependent variable in this study is financial performance proxy by Total Assets, Equity and Total liability of the firms while Earnings Management is the independent variable (proxy by Net profit or Profit for the Year). The findings show that Earnings Management does not have significant impact on financial performance of consumer goods firms in Nigeria. The study recommended that there should be conscious effort by management of consumer goods firms to improve the earnings management situation in order to impact on financial performance of the sector; Management of consumer goods firms should emphasize the equity of firms as a means of widening ownership fund position and internal source of capital; There must be re-assessment of the liabilities of such firms for proper positioning of financial performance of consumer goods firms in Nigeria.

Published in	Journal of Finance and Accounting (Volume 8, Issue 1)
DOI	10.11648/j.jfa.20200801.15
Page(s)	34-47
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Earnings Management, Financial Performance, Consumer Goods Firms

References

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APA Style

Ubesie Madubuko Cyril, Nwankwo Bobby Godwin Ogbogu, Nwankwo Peter Emeka. (2020). Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria. Journal of Finance and Accounting, 8(1), 34-47. https://doi.org/10.11648/j.jfa.20200801.15

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ACS Style

Ubesie Madubuko Cyril; Nwankwo Bobby Godwin Ogbogu; Nwankwo Peter Emeka. Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria. J. Finance Account. 2020, 8(1), 34-47. doi: 10.11648/j.jfa.20200801.15

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AMA Style

Ubesie Madubuko Cyril, Nwankwo Bobby Godwin Ogbogu, Nwankwo Peter Emeka. Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria. J Finance Account. 2020;8(1):34-47. doi: 10.11648/j.jfa.20200801.15

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@article{10.11648/j.jfa.20200801.15,
  author = {Ubesie Madubuko Cyril and Nwankwo Bobby Godwin Ogbogu and Nwankwo Peter Emeka},
  title = {Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria},
  journal = {Journal of Finance and Accounting},
  volume = {8},
  number = {1},
  pages = {34-47},
  doi = {10.11648/j.jfa.20200801.15},
  url = {https://doi.org/10.11648/j.jfa.20200801.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20200801.15},
  abstract = {There are two different tools of earnings management; real activities and accruals. Prior research shows that the discussion on earnings management was primarily focused on accrual manipulation strategies while recently many articles have focused on real activity manipulation as a proxy for earnings management. In accrual manipulation, managers introduce their judgment and subjectivity by accounting choices in the financial reports, and hence it could distort a company’s underlying operating performance. The main objective of this study was to determine the impact of Earnings Management on financial performance of consumer goods firms in Nigeria. The study adopted the ex-post facto research design and used simple regression analysis for analysing the pooled secondary data obtained from three selected consumer goods firms in Nigeria. The dependent variable in this study is financial performance proxy by Total Assets, Equity and Total liability of the firms while Earnings Management is the independent variable (proxy by Net profit or Profit for the Year). The findings show that Earnings Management does not have significant impact on financial performance of consumer goods firms in Nigeria. The study recommended that there should be conscious effort by management of consumer goods firms to improve the earnings management situation in order to impact on financial performance of the sector; Management of consumer goods firms should emphasize the equity of firms as a means of widening ownership fund position and internal source of capital; There must be re-assessment of the liabilities of such firms for proper positioning of financial performance of consumer goods firms in Nigeria.},
 year = {2020}
}

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TY  - JOUR
T1  - Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria
AU  - Ubesie Madubuko Cyril
AU  - Nwankwo Bobby Godwin Ogbogu
AU  - Nwankwo Peter Emeka
Y1  - 2020/02/14
PY  - 2020
N1  - https://doi.org/10.11648/j.jfa.20200801.15
DO  - 10.11648/j.jfa.20200801.15
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 34
EP  - 47
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20200801.15
AB  - There are two different tools of earnings management; real activities and accruals. Prior research shows that the discussion on earnings management was primarily focused on accrual manipulation strategies while recently many articles have focused on real activity manipulation as a proxy for earnings management. In accrual manipulation, managers introduce their judgment and subjectivity by accounting choices in the financial reports, and hence it could distort a company’s underlying operating performance. The main objective of this study was to determine the impact of Earnings Management on financial performance of consumer goods firms in Nigeria. The study adopted the ex-post facto research design and used simple regression analysis for analysing the pooled secondary data obtained from three selected consumer goods firms in Nigeria. The dependent variable in this study is financial performance proxy by Total Assets, Equity and Total liability of the firms while Earnings Management is the independent variable (proxy by Net profit or Profit for the Year). The findings show that Earnings Management does not have significant impact on financial performance of consumer goods firms in Nigeria. The study recommended that there should be conscious effort by management of consumer goods firms to improve the earnings management situation in order to impact on financial performance of the sector; Management of consumer goods firms should emphasize the equity of firms as a means of widening ownership fund position and internal source of capital; There must be re-assessment of the liabilities of such firms for proper positioning of financial performance of consumer goods firms in Nigeria.
VL  - 8
IS  - 1
ER  -

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Author Information

Ubesie Madubuko Cyril

Department of Accountancy, Faculty of Management Sciences, Enugu State University of Science and Technology, Enugu, Nigeria
Nwankwo Bobby Godwin Ogbogu

Department of Accountancy, Faculty of Management Sciences, Enugu State University of Science and Technology, Enugu, Nigeria
Nwankwo Peter Emeka

Department of Accountancy, Faculty of Management Sciences, Enugu State University of Science and Technology, Enugu, Nigeria

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APA Style

Ubesie Madubuko Cyril, Nwankwo Bobby Godwin Ogbogu, Nwankwo Peter Emeka. (2020). Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria. Journal of Finance and Accounting, 8(1), 34-47. https://doi.org/10.11648/j.jfa.20200801.15

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ACS Style

Ubesie Madubuko Cyril; Nwankwo Bobby Godwin Ogbogu; Nwankwo Peter Emeka. Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria. J. Finance Account. 2020, 8(1), 34-47. doi: 10.11648/j.jfa.20200801.15

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AMA Style

Ubesie Madubuko Cyril, Nwankwo Bobby Godwin Ogbogu, Nwankwo Peter Emeka. Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria. J Finance Account. 2020;8(1):34-47. doi: 10.11648/j.jfa.20200801.15

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@article{10.11648/j.jfa.20200801.15,
  author = {Ubesie Madubuko Cyril and Nwankwo Bobby Godwin Ogbogu and Nwankwo Peter Emeka},
  title = {Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria},
  journal = {Journal of Finance and Accounting},
  volume = {8},
  number = {1},
  pages = {34-47},
  doi = {10.11648/j.jfa.20200801.15},
  url = {https://doi.org/10.11648/j.jfa.20200801.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20200801.15},
  abstract = {There are two different tools of earnings management; real activities and accruals. Prior research shows that the discussion on earnings management was primarily focused on accrual manipulation strategies while recently many articles have focused on real activity manipulation as a proxy for earnings management. In accrual manipulation, managers introduce their judgment and subjectivity by accounting choices in the financial reports, and hence it could distort a company’s underlying operating performance. The main objective of this study was to determine the impact of Earnings Management on financial performance of consumer goods firms in Nigeria. The study adopted the ex-post facto research design and used simple regression analysis for analysing the pooled secondary data obtained from three selected consumer goods firms in Nigeria. The dependent variable in this study is financial performance proxy by Total Assets, Equity and Total liability of the firms while Earnings Management is the independent variable (proxy by Net profit or Profit for the Year). The findings show that Earnings Management does not have significant impact on financial performance of consumer goods firms in Nigeria. The study recommended that there should be conscious effort by management of consumer goods firms to improve the earnings management situation in order to impact on financial performance of the sector; Management of consumer goods firms should emphasize the equity of firms as a means of widening ownership fund position and internal source of capital; There must be re-assessment of the liabilities of such firms for proper positioning of financial performance of consumer goods firms in Nigeria.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Appraisal of the Impact of Earnings Management on Financial Performance of Consumer Goods Firms in Nigeria
AU  - Ubesie Madubuko Cyril
AU  - Nwankwo Bobby Godwin Ogbogu
AU  - Nwankwo Peter Emeka
Y1  - 2020/02/14
PY  - 2020
N1  - https://doi.org/10.11648/j.jfa.20200801.15
DO  - 10.11648/j.jfa.20200801.15
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 34
EP  - 47
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20200801.15
AB  - There are two different tools of earnings management; real activities and accruals. Prior research shows that the discussion on earnings management was primarily focused on accrual manipulation strategies while recently many articles have focused on real activity manipulation as a proxy for earnings management. In accrual manipulation, managers introduce their judgment and subjectivity by accounting choices in the financial reports, and hence it could distort a company’s underlying operating performance. The main objective of this study was to determine the impact of Earnings Management on financial performance of consumer goods firms in Nigeria. The study adopted the ex-post facto research design and used simple regression analysis for analysing the pooled secondary data obtained from three selected consumer goods firms in Nigeria. The dependent variable in this study is financial performance proxy by Total Assets, Equity and Total liability of the firms while Earnings Management is the independent variable (proxy by Net profit or Profit for the Year). The findings show that Earnings Management does not have significant impact on financial performance of consumer goods firms in Nigeria. The study recommended that there should be conscious effort by management of consumer goods firms to improve the earnings management situation in order to impact on financial performance of the sector; Management of consumer goods firms should emphasize the equity of firms as a means of widening ownership fund position and internal source of capital; There must be re-assessment of the liabilities of such firms for proper positioning of financial performance of consumer goods firms in Nigeria.
VL  - 8
IS  - 1
ER  -

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