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Effect of Accruals Earnings Management on Share Price of Quoted Nigerian Firms

Received: 27 March 2019     Accepted: 19 August 2019     Published: 2 September 2019
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Abstract

Earnings management occurs during which financial reports are prepared using judgment in order to mislead the stakeholders about the underlying economic performance of the company, or to influence contractual outcomes that are based on the reported earnings. This indicates that managements have incentives to manipulate the earnings in the purpose of maximizing the wealth of the company and/or the manager. This study employed the panel least squares while assuming fixed effects to test the effect of accrual-based earnings management on share prices of ten (10) sectors purposively sampled for twelve (12) years (2006 – 2017) and resulting in one hundred and fifteen (115) observations. The findings of DAA (Discretionary Adjustment Accrual) been positive and significant conforms with prior studies that distinguishes earnings management based on discretionary accruals. This suggests that discretionary accruals adjustment provides managers in Nigerian quoted firms the opportunities to manipulate earnings and hence share prices.

Published in International Journal of Finance and Banking Research (Volume 5, Issue 4)
DOI 10.11648/j.ijfbr.20190504.15
Page(s) 105-113
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Earnings Management, Share Price, Nigerian Firms, Accruals

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Cite This Article
  • APA Style

    Ubesie Madubuko Cyril, Ogbu Samuel, Mbah Chris Chukwuemeka. (2019). Effect of Accruals Earnings Management on Share Price of Quoted Nigerian Firms. International Journal of Finance and Banking Research, 5(4), 105-113. https://doi.org/10.11648/j.ijfbr.20190504.15

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    ACS Style

    Ubesie Madubuko Cyril; Ogbu Samuel; Mbah Chris Chukwuemeka. Effect of Accruals Earnings Management on Share Price of Quoted Nigerian Firms. Int. J. Finance Bank. Res. 2019, 5(4), 105-113. doi: 10.11648/j.ijfbr.20190504.15

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    AMA Style

    Ubesie Madubuko Cyril, Ogbu Samuel, Mbah Chris Chukwuemeka. Effect of Accruals Earnings Management on Share Price of Quoted Nigerian Firms. Int J Finance Bank Res. 2019;5(4):105-113. doi: 10.11648/j.ijfbr.20190504.15

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  • @article{10.11648/j.ijfbr.20190504.15,
      author = {Ubesie Madubuko Cyril and Ogbu Samuel and Mbah Chris Chukwuemeka},
      title = {Effect of Accruals Earnings Management on Share Price of Quoted Nigerian Firms},
      journal = {International Journal of Finance and Banking Research},
      volume = {5},
      number = {4},
      pages = {105-113},
      doi = {10.11648/j.ijfbr.20190504.15},
      url = {https://doi.org/10.11648/j.ijfbr.20190504.15},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20190504.15},
      abstract = {Earnings management occurs during which financial reports are prepared using judgment in order to mislead the stakeholders about the underlying economic performance of the company, or to influence contractual outcomes that are based on the reported earnings. This indicates that managements have incentives to manipulate the earnings in the purpose of maximizing the wealth of the company and/or the manager. This study employed the panel least squares while assuming fixed effects to test the effect of accrual-based earnings management on share prices of ten (10) sectors purposively sampled for twelve (12) years (2006 – 2017) and resulting in one hundred and fifteen (115) observations. The findings of DAA (Discretionary Adjustment Accrual) been positive and significant conforms with prior studies that distinguishes earnings management based on discretionary accruals. This suggests that discretionary accruals adjustment provides managers in Nigerian quoted firms the opportunities to manipulate earnings and hence share prices.},
     year = {2019}
    }
    

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  • TY  - JOUR
    T1  - Effect of Accruals Earnings Management on Share Price of Quoted Nigerian Firms
    AU  - Ubesie Madubuko Cyril
    AU  - Ogbu Samuel
    AU  - Mbah Chris Chukwuemeka
    Y1  - 2019/09/02
    PY  - 2019
    N1  - https://doi.org/10.11648/j.ijfbr.20190504.15
    DO  - 10.11648/j.ijfbr.20190504.15
    T2  - International Journal of Finance and Banking Research
    JF  - International Journal of Finance and Banking Research
    JO  - International Journal of Finance and Banking Research
    SP  - 105
    EP  - 113
    PB  - Science Publishing Group
    SN  - 2472-2278
    UR  - https://doi.org/10.11648/j.ijfbr.20190504.15
    AB  - Earnings management occurs during which financial reports are prepared using judgment in order to mislead the stakeholders about the underlying economic performance of the company, or to influence contractual outcomes that are based on the reported earnings. This indicates that managements have incentives to manipulate the earnings in the purpose of maximizing the wealth of the company and/or the manager. This study employed the panel least squares while assuming fixed effects to test the effect of accrual-based earnings management on share prices of ten (10) sectors purposively sampled for twelve (12) years (2006 – 2017) and resulting in one hundred and fifteen (115) observations. The findings of DAA (Discretionary Adjustment Accrual) been positive and significant conforms with prior studies that distinguishes earnings management based on discretionary accruals. This suggests that discretionary accruals adjustment provides managers in Nigerian quoted firms the opportunities to manipulate earnings and hence share prices.
    VL  - 5
    IS  - 4
    ER  - 

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Author Information
  • Department of Accountancy, Enugu State University of Science and Technology, Enugu, Nigeria

  • Department of Accountancy, Enugu State University of Science and Technology, Enugu, Nigeria

  • Department of Accountancy, Enugu State University of Science and Technology, Enugu, Nigeria

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