Vol. 1 No. 2 (2023)
Articles

EFFECT OF EARNINGS MANAGEMENT ON FINANCIAL PERFORMANCE: A STUDY OF MANUFACTURING FIRMS IN NIGERIA

Ogbodo, Okenwa Cy
Department of Accountancy, Nnamdi Azikiwe University, Awka. cy.ogbodo@unizik.edu.ng
Ibobo, Kelvin C.
Department of Accountancy, Nnamdi Azikiwe University, Awka. cy.ogbodo@unizik.edu.ng. ibobo.kelvin@yahoo.com 

Published 2023-07-28

Keywords

  • Discretionary accruals,
  • Return on equity,
  • Profit margin

How to Cite

Ogbodo, Okenwa Cy, & Ibobo, Kelvin C. (2023). EFFECT OF EARNINGS MANAGEMENT ON FINANCIAL PERFORMANCE: A STUDY OF MANUFACTURING FIRMS IN NIGERIA. American Research Journal of Contemporary Issues, 1(2), 59-72. https://www.openjournals.ijaar.org/index.php/arjci/article/view/115

How to Cite

Ogbodo, Okenwa Cy, & Ibobo, Kelvin C. (2023). EFFECT OF EARNINGS MANAGEMENT ON FINANCIAL PERFORMANCE: A STUDY OF MANUFACTURING FIRMS IN NIGERIA. American Research Journal of Contemporary Issues, 1(2), 59-72. https://www.openjournals.ijaar.org/index.php/arjci/article/view/115

Abstract

This study determined the effect of earnings management on financial performance of manufacturing firms in Nigeria using discretionary accruals as the independent variable while return on equity and profit margin were used for financial performance. Ex-Post Facto research design was adopted for the study. Data were extracted from annual reports and account of the sampled manufacturing firms in Nigeria from 2012-2021. Regression analysis statistical tool was employed to test the hypotheses. This study revealed that discretionary accrual has a positive and significant effect on returns on equity and net profit margin. In conclusion, the study submits that earnings management has a positive effect on financial performance of manufacturing firms in Nigeria though the effect is not statistically significant. Based on the study findings, the study recommended that firms’ management should decrease the cost of goods sold and reduce the research and development investment to boost the return on equity for the period.

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