Earnings Management and Perspective of Shareholders Wealth Maximization In Nigerian Listed Firms

Author(s)

Wasiu Abiodun, SANYAOLU , Kehinde Asamu, JOB-OLATUNJI. ,

Download Full PDF Pages: 67-74 | Views: 340 | Downloads: 102 | DOI: 10.5281/zenodo.3468941

Volume 6 - April 2017 (04)

Abstract

The investigation of the effect of earnings management on shareholders wealth maximization is the prime focus of this work. Secondary data were gotten from annual reports of the eight selected firms covering five years from 2011-2015. Econometric analysis through panel regression was employed to estimate the model built for the study, Modified Cross Sectional Jones Model (1995) was used for calculation of discretionary accruals. Earnings per share and Dividend per Share were used as proxies for dependent variables discretionary accrual was used to proxy independent variable (Earnings management). The empirical results deposit that earnings management (discretionary accruals) has no significant effect on earnings per share and dividend per share, which is against the proposition (a priori expectation) .It is therefore strongly recommended that firms should keep strengthening` internal control and corporate governance mechanism so as to reduce the negative effect of future unethical accounting practices on the actualization of shareholders wealth maximization and that they should also adopt full set of International Financial reporting Standards in the preparation of financial statement so as to make the financial statement show true and fair view of companies affairs. The study contributes in general to the existing literature on the effect of earnings management on performance of listed companies in Nigeria stock exchange by finding insignificant effect of earnings management on shareholders wealth maximization and it contributes to existing literature specifically by examining the effect of earnings management proxy by discretionary accrual on earnings per share and dividend per share(proxies of shareholders wealth maximization) from the perspectives of oil companies, publishing companies, banks and other manufacturing firms listed in Nigerian stock exchange. 

Keywords

Earnings Management, Earnings per share Dividend per Share and Wealth Maximisation

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