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Accounting Conservatism and Performance of Nigerian Consumer Goods Firms¡¯: An Examination of the Role of Accruals

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  • David Okelue Ugwunta
  • Boniface Uche Ugwuanyi

Abstract

In this study the evidence over the existence and magnitude of the assumed negative relation between accounting conservatism and firm performance in Nigeria was examined. Data from the annual financial statements of firms under the Consumer Goods sectoral classification on the Nigerian Stock exchange was used. The hypotheses were tested using the panel least squares while assuming the fixed effects. Opposed to the assumed negative relation, findings from the study suggest that accounting conservatism has a positive but non-significant effect on firm performance. This implies that firms in the Nigerian Consumer Goods sector do not practice accounting conservatism and hence produce low financial reporting quality. This is given the absence of accruals quality achieved when the reported information reported is credible and free of error and bias, intentional or otherwise. The study recommends that firms in Nigeria should be penalised if reported information are found to incomplete and opaque not free of error and bias.

Suggested Citation

  • David Okelue Ugwunta & Boniface Uche Ugwuanyi, 2019. "Accounting Conservatism and Performance of Nigerian Consumer Goods Firms¡¯: An Examination of the Role of Accruals," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(1), pages 1-9, January.
    • Handle: RePEc:jfr:ijfr11:v:10:y:2019:i:1:p:1-9
    DOI: 10.5430/ijfr.v10n1p1
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    References listed on IDEAS

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    Cited by:

    1. Henry Osahon Osazevbaru, 2021. "Conservative Business Strategy as Moderator of Board Independence and Corporate Performance Nexus in Nigerian Financial Companies," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(6), pages 446-456, June.

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