EFFECT OF 2011 CORPORATE GOVERNANCE REFORM ON EARNINGSQUALITY: THE NIGERIAN LISTED COMPANIES IN PERSPECTIVE

Abstract

This study examines the 2011 corporate governance reform effect on earnings quality of
companies listed on the Nigerian Stock Exchange (NSE). The study covered a total
population of one hundred and sixty-nine (169) companies listed as at 31st December, 2018.
A sample of one hundred and nineteen (119) listed companies between 2003 and 2018 was
scientifically selected and the data for the periods was obtained from the companies’ annual
reports and accounts. Ordinary least square regression analysis techniques were used to
analyse the data by the study and the result of the random effect model revealed that the
effect of 2011 corporate governance reform (proxied by DCGR) on earnings quality (proxied
by DA) of companies listed on NSE was negative and insignificant. The result of the control
variables shows that board size exerts negative and insignificant effect on DA, while external
audit quality and firm size and had positive and insignificant effect on DA. The study
concludes that the 2011 corporate governance reform in companies listed on the NSE is a
welcome development because it had a positive and insignificant effect on discretionary
accrual, thus increases earnings quality. The study recommends to the Nigerian regulatory
bodies such as the Securities and Exchange Commission (SEC) and Financial Reporting
Council of Nigeria (FRCN) to continue reforming corporate governance to strengthen the
effectiveness of the corporate governance mechanisms because it will lower discretionary
accrual thus increase the companies’ earnings quality in Nigerian listed companies.