Corporate Diversification, Managerial Shareholding and Accrual-Based Earnings Management: Evidence from Nigeria

Corporate Diversification, Managerial Shareholding and Accrual-Based Earnings Management: Evidence from Nigeria

Author: 
Ahmed, Abubakar
Place: 
London
Publisher: 
Adonis & Abbey
Date published: 
2021
Record type: 
Responsibility: 
Madobi, Sani Mahmud, jt. author
Mafindi, Aliyu Magaji, jt. author
Nuhu, Abubakar, jt. author
Journal Title: 
African Journal of Business and Economic Research (AJBER)
Source: 
African Journal of Business and Economic Research, Vol. 16, No. 4, 2021, pp. 291–310
Abstract: 

Previous studies hold that information asymmetry and offsetting accrual hypotheses explain the role of diversification in earnings management. Our paper adds to this line of research by examining the effect of corporate diversification on earnings management and investigating whether managerial shareholding matters in the relationship between diversification and earnings management in the context of an emerging economy. The study used a sample of 45 companies listed on the Nigerian Stock Exchange from 2008 to 2018 and the Generalized Least Square (GLS) regression technique. The results revealed that industrial and geographical diversification have significant positive effects on earnings management. The result also showed that managerial shareholding has a significant negative moderating effect on the relationship between industrial diversification and earnings management. These findings suggest the need for regulators to encourage managerial shareholding in diversified firms through share-based remuneration to have more reliable earnings.

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CITATION: Ahmed, Abubakar. Corporate Diversification, Managerial Shareholding and Accrual-Based Earnings Management: Evidence from Nigeria . London : Adonis & Abbey , 2021. African Journal of Business and Economic Research, Vol. 16, No. 4, 2021, pp. 291–310 - Available at: http://library.au.int/corporate-diversification-managerial-shareholding-and-accrual-based-earnings-management-evidence