Research Article

CORPORATE STRUCTURE AND EARNINGS MANAGEMENT OF LISTED OIL AND GAS FIRMS IN NIGERIA

Ibrahim Ahmad Tijjani1*, Muhammad Liman Muhammad2, Mohammed Tanko3, Department of Accounting, Kaduna State University, Kaduna4
1 Department of Accounting, Nigerian Defence Academy, Kaduna
2 Department of Accounting, Bayero University, Kano
3 Department of Accounting, Kaduna State University, Kaduna
4 Department of Accounting, Ahmadu Bello University, Zaria Nigeria
* Corresponding author: atibrahim1979@gmail.com
Published: Dec, 2016
Pages: 108-124
Views: 169
Downloads: 739

Abstract

This paper investigates the relationship between corporate structure and earnings management of listed oil and gas firms in Nigeria for the period 2006 to 2015. Data was obtained from a sample of seven firms out of the population of nine firms through their annual reports and accounts. Corporate structure as an independent variable was proxied by leverage, tangibility, firm size and firm age, while the residuals from the modified Jones Model by Dechow et al (1995) was used to represent earnings management. The study adoptedordinary least square multiple regression technique in analyzing the data. The findings revealed that leverage, tangibility and firm size have negative impact on earnings management, while firm age has significant positive impact. It is recommended that the firms should increase the percentage of debt in their capital structure and also increase their investment on fixed assets as well as expanding the size of their operations, since the result provides evidence that leverage, tangibility and firm size have negative effect on earnings management.

Keywords

Leverage Tangibility Firm Size Firm Age Earnings Management

References

  1. Alsharairi, M & Aly, S (2011). Does high leverage impact on earnings management? Evidence from non-cash mergers and acquisitions. Global Conference on Business and Finance, Las Vegas, USA January.
  2. Ardison, K. M. M, Martinez, A. L. & Galdi, F. C (2012). The effect of leverage on earnings management in Brazil. Advances in Scientific and Applied Accounting, 5(3), 305 – 324.
  3. Aries, V (2015). The influence of leverage and its size on the earnings management. Research Journal of Finance & Accounting, 6(8), 159 – 167.
  4. Asija, A, Marisetty, V. B & Rangan, S (2014). Do insiders who pledge their shares manipulate reported earnings?
  5. Bizjak, J, Hayes, R. M & Kalpathy, S (2014). Performance contingent awards and earnings management, 1 – 48.
  6. Choi, J. J & Kim, M. S (2013). Reputation and real earnings management in business groups. Temple University Philippine.
  7. Dabor, E. S & Adeyemi, S. C (2009). Corporate governance and the credibility of financial statement in Nigeria. Journal of Business System, Governance and Ethics, 4(1), 22 – 36.
  8. Dechow, P. M, Sloan, R. G & Sweeney, A. P (2006). Detecting earnings management. The Accounting Review, 70, 193 – 225.
  9. Demers, E & Wang, C (2010). The impact of CEO career concerns on accruals based and real earnings management. Working Paper.
  10. Fairfield, P. M, Pinkowitz, Z, L & Tang, V, W (2008). Acquisitions to mask earnings management. Seminar paper at McDonough School of Business, Georgetown University, US.
  11. Hamza, T & Lakhal, F (2010). The determinants of earnings management by the acquirer: The case of French corporate takeovers.
  12. Januarsi, Y, Badina, T & Ferbrianti, D (2014). Leverage, corporate strategy and earnings management: Case of Indonesia. Journal on Busines Review, 3(2), 54 – 60.
  13. Kim, Y. S, Yura, K & Song, K. R (2013). Credit rating changes and earnings management. Unpublished Journal, 1 – 36.
  14. Roodposhti, F. R & Chashmi, S. (2011). The impact of corporate governance mechanisms on earnings management. African Journal of Business Management, 5(11), 4143 – 4151.
  15. Takhtaei, N, Ojaghi, M. A and Esfandabadi, S. H. S (2013). Effect of financial leverage and investment diversification on income-increasing earnings management. Middle-East Journal of Scientific Research, 16(6), 836 – 844.
  16. Uwuigbe, U, Ranti, U. O & Bernard, O (2015). Assessment of the effect of firm characteristics on earnings management of listed firms in Nigeria. Asian Economic and Finance Review, 5(2), 218 – 228.
  17. Walid, A, Bonsall, S. B, Koharki, K & Penn, M. W (2013). Firms' use of accounting discretion to influence their credit ratings. Journal of Accounting and Economics, 55, 129 – 147.
  18. Zhu, Y & Tian, G. G (2009). CEO pay-performance and board independence: The impact of earnings management in China. Working paper August, 30.
How to Cite

Tijjani, I. A., Muhammad, M. L., Tanko, M., & Kaduna, D. O. A. K. S. U. (2016). CORPORATE STRUCTURE AND EARNINGS MANAGEMENT OF LISTED OIL AND GAS FIRMS IN NIGERIA. Nigerian Journal of Accounting Research, 12(2), 108-124.

I. A. Tijjani, M. L. Muhammad, M. Tanko, and D. O. A. K. S. U. Kaduna, "CORPORATE STRUCTURE AND EARNINGS MANAGEMENT OF LISTED OIL AND GAS FIRMS IN NIGERIA," Nigerian Journal of Accounting Research, vol. 12, no. 2, pp. 108-124, December 2016.

Share this article:
Facebook X / Twitter LinkedIn
Download PDF Back to Articles