Moderating effect of managerial ownership on accounting conservatism and quality of earnings of listed industrial firms in Nigeria

Abstract

This study adopts a positivist view to the examined moderating effect of managerial ownership, accounting conservatism, and quality of earnings of listed industrial firms in Nigeria from 2009 to 2018. The study employed ex-post facto research design and panel multiple regression for the analysis. The population of the study comprised of 13 listed industrial firms in Nigeria as at 31st December 2018. Accounting conservatism was measured using Beaver and Ryan's (2000) model while the quality of earnings as measured by the modified Jones model. Managerial ownership was measured by the proportion of managerial ownership in the firm. It was discovered that an increase in accounting conservatism of industrial firms will lead to a decrease in quality of earnings, but moderated accounting conservatism has no statistically significant effect on the quality of earnings of industrial firms in Nigeria. The study recommends that shareholders of industrial firms in Nigeria should encourage accounting conservatism because it will reduce earnings quality practice by the management thereby bringing out the true picture of the financial activities of the organization. This will encourage more investment in the firm by potential and existing shareholders. Keywords: Accounting conservatism, Corporate governance, Financial reporting, Managerial ownership, Quality of earnings