EFFECTS OF OWNERSHIP STRUCTURE ON EARNINGS MANAGEMENT OF QUOTED COMPANIES IN NIGERIA
Abstract:The study examined the effect of ownership structure on earnings management of quoted companies in Nigeria. The study specifically, examined the effects of foreign ownership, institutional ownership, and managerial ownership on earnings management in Nigeria. The study employed panel data regression analysis with extensive reliance on secondary data, data was sourced from the annual reports of 30 sampled companies quoted on the Nigerian Stock Exchange between 2001 and 2021. Both statistical and econometric tools, including ordinary least square, were employed in the analysis. The findings of the study revealed that managerial ownership was found to be positively related to earnings management and statistically significant, foreign ownership was found to be negatively related to earnings management. Finally, institutional ownership was found to be negatively related to earnings management and non-statistically significant at a 5% level of significance. The study therefore, concluded that, ownership structure has positive effect on earnings management of quoted companies in Nigeria. The study recommended that more foreigners be allowed to invest and possibly be given a role on the board, because their presence may only serve as a constraint on managers manipulating reported earnings. Also, managers should be allowed to control up to 50% or more of the shares allotted in the company. This gives them too much power and control over other shareholders, which may be responsible for constraining the opportunistic behaviours exhibited by the managers in a bid to achieve short-term private gains.