Leadership Structure and Earnings Management in the Quoted Food and Beverages Companies in Nigeria
Author(s)
Owolabi, Sunday Ajao , Adegbie, Festus Folajimi , Aina, Grace Oluwatosin ,
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Abstract
Recently, there have been several deliberations on the importance of strong corporate governance; this led to different countries coming up with different guidelines and codes of practice to support governance. This paper investigated the effect of leadership structure on earnings management in selected quoted food and beverages companies in Nigeria. The ex-post facto research design was adopted for the paper. The sample size for this paper was selected from the population based on the number of food and beverages companies that have been consistently trading on the NSE for the period under study (2007-2017). The paper adopted inferential statistics for data analysis. From the findings, the result show that insiders’ ownership (β2= –0.375, t(127)= –3.71, p ˂.01) and ownership concentration (β3= –0.012, t(127)= –4.01, p= ˂ .01) have significant impact on EM, while CEO duality (β1= 0.418, t(127)= 6.33, p˂ .01) reported positive and significant. The findings revealed that leadership structure has a significant effect on earnings management. This paper concludes as insiders’ ownership and ownership concentration increases; it leads a decrease in discretionary accruals, i.e., improvement in earnings management practices by companies which do not provide incremental managerial ownership ability to reduce earnings management. This paper recommended that management of this companies are advised to adhere strictly to the code of corporate governance relating to the measures of insider ownership, ownership concentration, and CEO duality as they enhance earnings management practices.
Keywords
Corporate governance, Leadership structure, Earnings management, Managerial ownership
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