Ownership Structure and Earnings Management of Listed Consumer Goods and Agricultural Companies in Nigeria

Godwin,, OHIOKHA,; Abu, AYOBOH, Jimoh

Keywords: Earnings Management; Ownership Concentration; Institution Ownership Concentration; Managerial Ownership Concentration

Abstract

This study is centered on the prevalent contemporary issue of ownership structure and earnings management of listed consumer goods and agricultural companies in Nigeria The study employed panel cross sectional research design and secondary source of data for 23 selected samples which include 5 agricultural firms and 18 consumer goods firms trading at the Nigeria exchange group which make accounts to 31st December each year. This study covered eight years period dated 2015 to 2022. Using a panel least square regression method, the study employed descriptive methods to investigate the characterization of variables and inferential statistical analytical technique to ascertain the model's predictive power and dependability in strengthening the judgment of acceptance or rejection of the null hypothesis. The Variance Inflation Factors test, the Breusch-Godfrey serial correlation LM test, the Heteroskedasticity ARCH test, the Hausman test for the random/fixed effect model, and the panel least square regression with random effect which are used to test the hypothesis with the help of the p -value—were all necessary for the inferential statistics. The findings showed that ownership concentration has a significant and inverse relationship with earnings management (coefficient value: -0.121654, p-value: 0.0000); institutional ownership concentration has a positive and significant effect with a coefficient value of 0.095582, p-value: 0.000; managerial ownership concentration has a direct relationship with earnings management (coefficient value: 0.00802, p-value: 0.9555); and foreign ownership concentration has an inverse relationship with earnings management (p-value: 0.0005). The study recommends that the statutory authority such as the security and exchange commission and other corporate regulatory agencies should institutionalize the principle of substantial ownership of major shareholders to involve holders of shares of 5% and above because the presence of such stakeholders will mitigate earnings manipulation of listed entities.

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Published: 2024

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