The Effects of Real Earnings Manipulation on the Future Operating Performance: Empirical Evidence from the Public Listed Companies in Nigeria

International Journal of Accounting, Finance and Management, Vol. 1(1), pp. 89-116, 2016

18 Pages Posted: 7 Dec 2017 Last revised: 31 Jan 2019

See all articles by Bazeet Badru

Bazeet Badru

School of Economics, Finance and Banking. Universiti Utara Malaysia ; Universiti Utara Malaysia.

Jimoh Raji

Independent

Adbulkadri Idowu

University of Ilorin

Date Written: January 1, 2016

Abstract

This study analyses the aspects of real earnings management proxy that involves sales manipulation employ by companies to improve current performance against the future performance. The main objective was centered on whether manipulation of earnings to show good performance in the current period has implication on future performance. In order to achieve the objective, secondary data for a total number of 117 company year observations over a period from 2009 to 2011 was used. The empirical analysis in this study provides evidence that the larger percentage of Nigerian companies engage in sales manipulation to mimic strong performance in the current period, which later has adverse consequences on their future performance. The implication is that real earnings management through sales manipulation has a negative effect on the future performance. Based on the results, it can be concluded that real earnings management has a negative influence on the future performance of companies. The study infers that this explains why most of the Nigeria companies could not survive in the long term because the manager’s deceive investors by managing earnings to falsify performance.

Keywords: Earnings Management, Real Activities, Future Operating Performance, Sales Manipulation

Suggested Citation

Badru, Bazeet and Raji, Jimoh and Idowu, Adbulkadri, The Effects of Real Earnings Manipulation on the Future Operating Performance: Empirical Evidence from the Public Listed Companies in Nigeria (January 1, 2016). International Journal of Accounting, Finance and Management, Vol. 1(1), pp. 89-116, 2016 , Available at SSRN: https://ssrn.com/abstract=3076324

Bazeet Badru (Contact Author)

School of Economics, Finance and Banking. Universiti Utara Malaysia ( email )

Universiti Utara Malaysia
Sintok, Kedah 06010
Malaysia
+60147265986 (Phone)

Universiti Utara Malaysia. ( email )

Sintok, Sintok 06010
Malaysia
+60147265986 (Phone)

Jimoh Raji

Independent ( email )

Adbulkadri Idowu

University of Ilorin

DEPARTMENT OF GEOLOGY UNIVERSITY OF ILORIN
Ilorin, KS Kwara State 0834
Nigeria

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