Accounting Conservatism and Earnings Quality of Listed Non-Financial Companies in Nigeria
Accounting conservatism is significant because it reduces the possibility of overstating revenues and assets, which can result in a more cautious evaluation of a company's financial situation. Aggressive accounting techniques that might falsely increase reported earnings and deceive readers of financial statements are avoided with its assistance. This study assesses the influence of accounting conservatism and earnings quality in Nigeria. Ex-post factor research design was employed for the study. The population of study comprise 113 Non-financial listed companies in Nigeria while 58 listed were selected across six sectors (Agriculture 4; Conglomerate 5; Consumer goods 16; Health care 6; Industrial goods 10 and Services 17) based on availability of data needed for the study. The study obtained secondary data from annual reports of selected firms for thirteen (13) years (2010-2022). The collected data were analysis with aid of descriptive analysis such as table, percentage and Inferential statistics like PPMC and panel regression. The results show that accounting conservatism has a positive and statistically significant effect on earnings quality. Similarly, firm size also has a positive and statistically significant influence on earnings quality. More so, leverage and firm growth on the other hand, have negative and statistically significant effect on earnings quality. The study concludes that accounting conservatism has significant effect on earnings quality. Hence, the study recommends that firms should be chary to adopt more conservative accounting methods, as this can improve the credibility of their financial reporting and increase investor confidence.
Keywords: Accounting conservatism, earnings quality, prudence, accounting policies and estimates
Citation: Afolabi, T.O., Shittu, S.A., & Ijakoli, M.M. (2024). Accounting Conservatism and Earnings Quality of Listed Non-Financial Companies in Nigeria. International Journal of Innovative Research in Accounting and Sustainability, 9(4-Special Issue), 40-49.