Ownership Structure and Real Earnings Management: Evidence from Nigeria

  • Ahmad Haruna Abubakar University Sultan Zainal Abidin
  • Ahmad Muhammed Lawal University Utara Malaysia
  • Mohamed Ismail Mohamed SIMAD University Mogadishu Somalia
Keywords: Earnings Management, Managerial, Institutional, Foreign, Nigeria


Financial statements are expected to assist users in decision making by reporting the true and fair value of companies. However, there always exists the potential risks of manipulations of the reported results if the numbers were intentionally prepared to misrepresent the actual performance or conditions of the companies. Manipulating the reported earnings to achieve pre-set objectives is an art known as earnings management which can be classified into real or accrual manipulations. This study examines the effects of ownership structures (managerial, institutional, and foreign) on real earnings management in Nigeria. The analyses involve a sample of 72 non-financial firms with 360 firm-year observations for a period 2014-2018. Data was collected from the financial reports of these companies, Thompson Reuters, and Bloomberg databases. The multiple regression technique was employed for panel data analysis. The results show that managerial ownership increase management’s desire to manipulate the reported earnings, while institutional ownership have insignificant relationship with real earnings management. Also, the findings reveal that foreign ownership prevent managers’ from manipulating the financial statement. Thus, the study recommends that listed companies in Nigeria should consider higher percentage of foreign ownership to improve their monitoring and have quality financial statement.


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How to Cite
Abubakar, A. H., Ahmad Muhammed Lawal, & Mohamed Ismail Mohamed. (2020). Ownership Structure and Real Earnings Management: Evidence from Nigeria. The Journal of Management Theory and Practice (JMTP), 1(3), 43-50. https://doi.org/10.37231/jmtp.2020.1.3.61
Finance & Economics