Earnings Management and Financial Performance of Listed Firms in Nigeria

Abstract

The study focused on earnings management and financial performance of listed firms in Nigeria. Real earnings management, accrual earnings management and income smoothing earnings management were used as proxies for earnings management. However, return on asset was used as proxy for financial performance. To achieve the objective of the study, ex-post facto research design was adopted. The data were collected through secondary source from annual report and accounts of the selected firms in Nigeria from 2015 to 2024. The population of the study comprised of all the 149 firms listed in Nigeria exchange group as at 2025. The sample size was derived using both purposive sampling techniques and 70 listed firms were purposively selected. The data collected were analyzed using Panel GMM analysis. The findings revealed that Firms should adopt transparent disclosure practices, providing detailed breakdowns of earnings components. Clear reporting reduces opportunities for real earnings management (e.g., manipulating cash flows or expenses), ensuring that return on asset is not distorted by short-term manipulations. Also, firms should invest in ethics training for management and finance teams to discourage earnings management practices. Ethical leadership can prioritize long-term financial health over short-term boosts to return on asset, aligning reported performance with actual operational efficiency.