CORPORATE GOVERNANCE AND EARNINGS MANAGEMENT: EVIDENCE FROM LISTED INSURANCE COMPANIES IN NIGERIA
Keywords:
Audit committee efficacy, earnings management, board size, board independenceAbstract
This study was motivated by the imperative to enhance financial transparency and stability within Nigeria's critical insurance sector. Its primary objective was to evaluate board independence, audit committee expertise, and ownership structure on earnings management. Employed an ex-post facto research design, the study analysed secondary panel data collected from the annual reports of 34 Nigerian insurance companies (selected from a population of 67) spanning the years 2015 to 2024.Using Ordinary Least Squares (OLS) regression, the findings were mixed: Board independence (β=−0.074, p=0.25) and audit committee expertise (β=−0.019, p=0.75) were found to have no statistically significant impact on earnings management. However, ownership concentration (β=+0.045, p=0.041) showed a significant and positive relationship with an increase in earnings manipulation. The regression models were statistically robust, evidenced by high adjusted R² values (0.865 for discretionary accruals and 0.945 for real earnings management). This suggests a notable gap between formal corporate governance structures and actual oversight, implying that dominant shareholders may prioritize short-term gains. Consequently, the study recommended improving accountability by enhancing legal protections for independent directors, increasing ownership transparency, and strengthening regulatory oversight.
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