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Accrual and Real Earnings Management: Firm Value Analysis

Author

Listed:
  • Saheed Akande Shittu

    (Department of Accuntancy, Federal Polytechnic Ayede, Oyo State, Nigeria)

  • Hakeem Olayinka Onifade

    (Crescent University, Ogun State, Nigeria)

  • Khairat Taiwo Ajibola

    (Federal Polytechnic Ayede, Oyo State, Nigeria)

  • Sherifdeen Olatunji Aminu

    (Federal Polytechnic Ayede, Oyo State, Nigeria)

Abstract

The study examines the effect of accrual and Real Earnings Management (REM) on firm value of selected manufacturing firms in Nigeria. Tobin's Q was employed to measure firm value, while Larcker and Richardson's (2004) and Roychowdhury's (2006) models were used to proxy accrual-based and REM respectively. Purposive sampling technique was employed to select thirty-seven (37) listed manufacturing firms across conglomerates, health care, industrial goods, and consumer goods sectors in Nigeria. Panel regression analysis employed to analyse secondary data gathered for the study. The results reveal a negative and significant influence of accrual-based, while REM has a positive and significant influence on firm value of selected listed manufacturing firms in Nigeria. The study concludes that earnings management has a significant effect on firm value of manufacturing firms in Nigeria. The study recommends that REM be used only when absolutely necessary for the companies' survival and success.

Suggested Citation

  • Saheed Akande Shittu & Hakeem Olayinka Onifade & Khairat Taiwo Ajibola & Sherifdeen Olatunji Aminu, 2023. "Accrual and Real Earnings Management: Firm Value Analysis," Acta Universitatis Bohemiae Meridionalis, University of South Bohemia in Ceske Budejovice, Faculty of Economics, vol. 26(2), pages 68-79.
    • Handle: RePEc:boh:actaub:v:26:y:2023:i:2:p:68-79
    DOI: 10.32725/acta.2023.009
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    References listed on IDEAS

    as
    1. David F. Larcker & Scott A. Richardson, 2004. "Fees Paid to Audit Firms, Accrual Choices, and Corporate Governance," Journal of Accounting Research, Wiley Blackwell, vol. 42(3), pages 625-658, June.
    2. Edy Suprianto & Doddy Setiawan, 2020. "Accrual earning management and future performance: Evidence from family firm in Indonesia," Jurnal Akuntansi dan Auditing Indonesia, Accounting Department, Faculty of Business and Economics, Universitas Islam Indonesia, vol. 24(1), pages 33-42.
    3. repec:uii:jaaife:v:24:y:2020:i:1:p:33-42 is not listed on IDEAS
    4. Westerlund, Joakim & Breitung, Jörg, 2009. "Myths and Facts about Panel Unit Root Tests," Working Papers in Economics 380, University of Gothenburg, Department of Economics.
    5. Grzegorz Zimon & Andrea Appolloni & Hossein Tarighi & Seyedmohammadali Shahmohammadi & Ebrahim Daneshpou, 2021. "Earnings Management, Related Party Transactions and Corporate Performance: The Moderating Role of Internal Control," Risks, MDPI, vol. 9(8), pages 1-26, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Accrual; real earnings management; manufacturing firms; firm value; Nigeria;
    All these keywords.

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R39 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other

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