Firm Characteristics and Earnings Management of Listed Industrial Goods Companies in Nigeria

• Abdul-Ganiyy Akanni AGBAJE

  Author

• Ayodeji Lasunkanmi ADENIYI

  Author

• Khadijat Omolara KAREEM

  Author

• Muhammed Akinkunmi BELLO

  Author

• Muritala Makinde ADEGBOLA

  Author

This study delved into examining how specific firm characteristics impact Earnings Management (EM) in Nigerian 
quoted industrial goods businesses. The study focused on analysing the effects of debt, firm size, profitability, and 
liquidity on profit management among thirteen quoted industrial goods companies. These companies were selected 
using a census sampling technique from those actively and publicly traded on the Nigerian Exchange Group over ten 
years from 2012 to 2021. The data for the analysis was gathered from the audited annual reports of the chosen 
companies, and the methodology involved panel data estimation, correlation analysis, and descriptive statistics. 
According to the findings, profitability demonstrated a substantial negative impact on EM (t-val. =-2.210, p<0.05), 
implying that profitable companies engage in lower rates of earnings manipulation. Furthermore, the control variable 
of audit firm size (t-val. =-2.763, p<0.05) exhibited a substantial inverse effect on EM, while firm size (t-val. =-2.509, 
p<0.05) also showed a negative and significant influence on EM. This suggests that larger companies report reduced 
earnings manipulation, indicating a lower incidence of earnings manipulation in companies audited by the Big 4 
auditing firms (audit firm size). Based on the study's findings, it can be concluded that firm characteristics such as 
profitability, size, and audit firm size significantly impact EM. It is recommended that to reduce EM, managers and 
shareholders of industrial products companies should grow their company by employing qualified and competent staff 
and strengthen the firm’s financial performance 

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