Effect of Fraud on Financial Reporting and Misappropriation of Assets of Listed Conglomerate Companies in Nigeria

Abstract

This study investigates the effect of fraud on financial reporting quality and misappropriation of assets in listed conglomerate companies in Nigeria. The research is motivated by persistent concerns over fraudulent practices and their adverse impact on the integrity of financial reports and internal asset control within the corporate sector. The population of the study comprises of the six conglomerate firms quoted in the Nigerian Exchange Group (NGX) and the study uses a census sampling technique. Using panel data from six listed conglomerate firms over a ten-year period (2015–2024), the study adopts fixed effects regression models to assess how composite fraud scores influence financial reporting quality measured by discretionary accruals and misappropriation of assets captured through abnormal cost indicators. The findings reveal that fraud has a statistically significant negative effect on financial reporting quality and a strong positive effect on asset misappropriation. Specifically, an increase in fraud is associated with lower quality of reported financial information and a 12% rise in asset misuse. The study recommends that conglomerate firms adopt stricter fraud monitoring systems, enhance auditor independence, and ensure transparent financial reporting to protect stakeholder interests and corporate sustainability