Earnings management of publicly listed companies in Nigeria.

This study documents the deterministic factors and the magnitude of earnings management of Nigerian firms by applying five discretionary accruals models using the cohort of 62 firms listed on the Nigerian Stock Exchange (NSE) over a period of 2003-2012. It is observed that the Kothari et al. (2005) performance matched model provides better explanatory power to determine the magnitude of earnings management of Nigerian companies. Using this model, the study finds that the magnitude of earnings management is 5.02 percent, on average. However, the industry-wise analyses disclose that earnings management is dominant within the manufacturing and energy sector of the Nigerian economy at 48.38 percent followed by the 41.93 percent in the consumer goods sector. The study reveals that the effectiveness of monitoring role by internal and external shareholders is insignificant in improving firm's transparency in financial reporting activities. This finding is indeed useful for Nigerian companies and policymakers to restructure the dynamics of ownership structure in a way that can reduce the extent of earnings management in the manufacturing, energy and consumer goods sectors in Nigeria. --Leaf ii.