Implications of Earnings Management on the FirmValue of ListedNon-Financial Firms in Nigeria

Abstract

This study examined the implications of earnings management on the value of
sampled Nigerian non-financial firms. While earnings management was measuredthrough accrual earnings management (ACEM) and real earnings management (REM)
from production, the firm value was measured with Tobin Q. Data used weregenerated from a sample of sixty-nine (69) non-financial firms in Nigeria. In line withthe outcomes of specification tests, fixed ef ect panel regression was employedintesting the hypotheses. The results of the panel regression technique indicate that
while accrual earnings management recorded insignificant negative influence onTobin Q (t=-0.75; p>0.05), real earnings management was found to exerts significant
negative influence on Tobin Q (t=-2.56; p<0.05). The study thus concludes that
earnings management through real activities is detrimental to the market value of
Nigerian listed non-financial firms. Hence, the recommendation that emanates fromthis study is that EM practice among Nigeria non-financial firms shouldbediscouraged as it discourages investors and thus hinders the firm value and longrungrowth of the firm by extension.