American Journal of Economics, Finance and Management
Articles Information
American Journal of Economics, Finance and Management, Vol.4, No.4, Dec. 2018, Pub. Date: Dec. 25, 2018
Corporate Governance and Accounting Conservatism in Nigerian Foods and Beverages Firms
Pages: 124-133 Views: 1851 Downloads: 1115
[01] Godwin Emmanuel Oyedokun, Department of Accounting, Faculty of Administration, Nasarawa State University, Keffi, Nigeria.
[02] Saad Salisu, Department of Accounting, Faculty of Administration, Nasarawa State University, Keffi, Nigeria.
This study examined the effects of corporate governance on accounting conservatism in Nigerian foods and beverages sector. The study adopted the ex-post facto research design using panel data for the period 2012- 2016. The study’s population is 15 foods and beverages firms in the Nigerian Stock Exchange and 8 firms were selected as a sample after a filtering process. Secondary data were collected from financial statements and regression analysis was used to analyze the hypotheses. The study found that board independence has significant positive effects; board size has significant negative effects while audit committee independence has a positive but not significant effect on accounting conservatism of Nigerian foods and beverages sector. The study concluded that board independence and board size are factors that influence accounting conservatism while audit committee independence does not influence accounting conservatism of Nigerian foods and beverages sector. The study recommended that food and beverages firms in Nigeria should compose more of non-executive directors on their board as this can generate the needed assurance for better financial reporting as indicated by the result of the study. Also, firms should have a small board size so as to enhance conservatism reporting. While firms should provide higher non-executive directors on their audit committee so as to improve the reporting quality of their reports.
Board Size, Board Independence, Conservatism, Corporate Governance, Food and Beverages Companies
[01] Abbas, G. Z., & Mohammadreza, S. (2015). The effect of corporate governance, supervision and management attributes on accounting conservatism. Journal of Management and Accounting Studies, 3 (4), 211-222.
[02] Agrawal, A., & Williamson, A. (2006). Did new regulations target the relevant corporate governance attributes? Working Paper, Georgetown University.
[03] Ahmed, A. S., & Duellman, S. (2007). Accounting conservatism and board of director characteristics: An empirical analysis. Journal of Accounting and Economics, 43 (2-3), 411-437.
[04] Ahmed, K., & Henry, D. (2012). Accounting conservatism and voluntary corporate governance mechanisms by Australian firms. Accounting & Finance, 52 (3), 631–662.
[05] Artiach, T. C., & Clarkson, P. M. (2013). Conservatism, disclosure and the cost of equity capital. Australian Journal of Management, 0 (0), 1-22
[06] Aruwa, S. A. S., & Atabs, T. S. (2011). The effect of creative accounting practices on reported profit and liquidity of quoted commercial banks in Nigeria. Journal of Governmental and Financial Accounting Research, 1 (1).
[07] Ball, R., & Shivakumar, L. (2005). Earnings quality in UK private firms: Comparative loss recognition timeliness. Journal of Accounting and Economics, 39 (1): 83-128.
[08] Basu, S. (1997). The conservatism principle and the asymmetric timeliness of earnings. Journal of Accounting and Economics, 24 (1), 3-37.
[09] Beasley, M. S., Carcello, J. V., Hermanson, D. R., & Lapides, P. D. (2000). Fraudulent financial reporting: Consideration of industry traits and corporate governance mechanisms. Accounting Horizon 14 (4), 441-454.
[10] Beekes, W., Pope, P., & Young, S. (2004). The link between earnings timeliness, earnings conservatism and board composition: Evidence from the UK. Corporate Governance: An international review, 12 (1), 47-59.
[11] Callen, J., Guan, Y. & Qiu, J. (2014). The market for corporate control and accounting conservatism. Social Science Research Network.
[12] Cano-Rodríguez, M., & Núñez-Nickel, M. (2015). Aggregation bias in estimates of conditional conservatism: theory and evidence. Journal of Business Finance & Accounting, 42 (1-2), 51-78.
[13] Caskey, J., & Laux, V. (2017). Corporate governance, accounting conservatism and manipulation. Journal of Management Science, 63 (2), 424-437.
[14] Chi, W., Liu, C., & Wang, T. (2009). What affects accounting conservatism: A corporate governance perspective? Journal of Contemporary Accounting and Economics, 5 (1), 47-59.
[15] Dandago, K. I., Akintoye, I. R., Obisesan, D. O. O., Enigbokan, F., Adegun, E. A., Popoola, T., Offiah, E. & Ogunjubom, F. I. (2010). Financial Reporting and Ethics. Lagos, Nigeria: V. I. Publishing limited.
[16] Dietrich, D., Muller, K., & Riedl, E. (2007). Asymmetric timeliness tests of accounting conservatism. Review of Accounting Studies, 12 (1), 95-124.
[17] Donglin, X., & Song, Z. (2009). Corporate governance and accounting conservatism in China. China Journal of Accounting Research, 2 (2), 81-108.
[18] Ford, H. A. J., Austin, R. P., & Ramsay, I. M. (1999). Ford’s principles of corporation’s law. (9th ed.). Butterworths, Sydney.
[19] Futing, T. (2015). Empirical research of accounting conservatism and over-investment in listed firms of China. International Journal of Economics, Commerce and Management, 3 (5), 145-159.
[20] Garcia, L. J. M., Garcia, O. & Penalva, F. (2007). Board of directors’ characteristics and conditional accounting conservatism: Spanish evidence. European Accounting Review, 16 (4), 727-755
[21] Givoly, D., & Hayn, C. (2000). The changing time-series properties of earnings, cash flows and accruals: Has financial reporting become more conservative? Journal of Accounting and Economics, 29 (3), 287-320.
[22] Horwath, NSW. (2003). Corporate governance report. Sydney Australia: Horwath (NSW) Pty Limited.
[23] International Accounting Standards Board (2006). Preliminary views on an improved conceptual framework for financial reporting: The objective of financial reporting and qualitative characteristics of decision-useful financial reporting information. International Accounting Standards Board.
[24] Joo, A. H. (2009). Association between board characteristics and accounting conservatism: Empirical evidence from Malaysia. Dissertation. Auckland University of Technology, Malaysia.
[25] Kiel, G. C., & Nicholson, G. J. (2003). Board composition and corporate performance: how the Australian experience informs contrasting theories of corporate governance. Corporate Governance, 11 (3), 189-205.
[26] Klein, A., (2002). The audit committee, the board of director characteristics, and earnings management. Journal of Accounting and Economics, 33 (3), 375-400.
[27] Kurawa, J. M., & Kabara, A. S. (2014). Impact of corporate governance on voluntary disclosure by firms in the downstream sector of the Nigerian petroleum industry. World Business Research Conference. Dubai, UAE.
[28] LaFond, R., & Roychowdhury, S. (2008). Managerial ownership and accounting conservatism. Journal of Accounting Research, 46, 101-135.
[29] Lai, C., & Taylor, S. L. (2008). Estimating and validating a firm-year-specific measure of conservatism: Australian evidence. Working Paper, University of New South Wales.
[30] Larcker, D., Richardson, S., Tuna, I., (2007). How important is corporate governance? Working Paper. University of Pennsylvania - The Wharton School.
[31] Lavelle, L. (2002). Enron: How corporate governance rules failed. Business Week (Asian ed.), 21, 38-39.
[32] Leventis, S., Dimitropoulos, P., & Owusu-Ansah, S. (2013). Corporate governance and accounting conservatism: Evidence from the banking industry. Corporate Governance: An International Review, 21 (3), 264-286.
[33] Lim, R. (2011). Are corporate governance attributes associated with accounting conservatism? Accounting & Finance, 51 (4), 1007-1030.
[34] Maali, K., & Anis, J. (2015). Accounting conservatism and earning timeliness: Impact on corporate governance index. International Journal of Advanced Research, 3 (7), 132-142.
[35] Mohammed, N. F. (2011). Accounting conservatism, corporate governance and political influence. Msc Accounting Thesis. La Trobe University, Australia.
[36] Mulford, W. C., & Comiskey, M. E. (2002). The financial numbers game: Detecting creative accounting practices. New York: John Wiley and Sons.
[37] Nasr, M. A., & Ntim, C. G. (2017). Corporate governance mechanisms and accounting conservatism: evidence from Egypt. Corporate Governance: The International Journal of Business in Society, 18 (3), 386-407.
[38] Patatoukas, P. N., & Thomas, J. K. (2011). More evidence of bias in differential timeliness estimates of conditional conservatism. The Accounting Review, 86 (5), 1765–1793.
[39] Poorzamani, Z., & Anhari, N. (2013). The relationship between conditional and unconditional conservatism with Altman's bankruptcy model index. Life Science Journal, 10 (7).
[40] Pope, P. F., & Walker, M., (2003). Ex-ante and ex-post accounting conservatism, asset recognition and asymmetric earnings timeliness. Working Paper. Lancaster University, England.
[41] Rahimah, M. Y. (2011). The effect of ownership concentration, board of directors, audit committee and ethnicity on conservative accounting: Malaysian evidence. PhD Thesis, Edith Cowan University, Australia.
[42] Roslinda, D. (2009). The effect of corporate governance and accounting conservatism. A PhD dissertation. University of New South Wales.
[43] Ruch, G. W., & Taylor, G. (2015). Accounting conservatism: A review of the literature. Journal of Accounting Literature, 34, 17-38.
[44] Sanda, A. U., Mikailu, A. S., & Garba, T. (2004). Director shareholding, board size and firm performance of firms in Nigerian Stock Exchange. Nigerian Journal of Accounting Research, 1 (1), 22-34.
[45] Security and Exchange Commission (2008). SEC’s findings and decision on Cadbury’s misstatements in published accounts. S. E. C., Nigeria.
[46] Shleifer, A., & Vishny, R. (1997). A survey of corporate governance. Journal of Finance, 52 (2), 737-787.
[47] Watts, R. L. (2003a). Conservatism in accounting part I: Explanations and implications. Accounting Horizons, 17 (3), 207–221.
[48] Watts, R. L. (2003b). Conservatism in accounting part II: Evidence and research opportunities. Accounting Horizons, 17 (4), 287–301.
[49] Watts, R. L. (2006). What has the invisible hand achieved? Accounting and Business Research, 36 (1), 51-61.
[50] Watts, R. L., & Zimmerman, J. L. (1986). Positive accounting theory. Prentice-Hall, Englewood Cliffs, N. J.
[51] Yermack, D. (1995). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40, 185-211.
MA 02210, USA
AIS is an academia-oriented and non-commercial institute aiming at providing users with a way to quickly and easily get the academic and scientific information.
Copyright © 2014 - American Institute of Science except certain content provided by third parties.