The effects of real earnings manipulation on future operating performance: empirical evidence from public listed companies in Nigeria
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Date
2016
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Publisher
College of Social and Management Sciences, Afe Babalola University
Abstract
This study analyses the aspects of real earnings management proxy that involves sales manipulation employed by companies to improve current performance against the future performance. The main objective was centred 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 provide evidence that larger percentage of Nigerian companies engage in sales manipulation to mimic strong performance in the current period, which later have 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 negative influence on the future performance of companies. The study infers that this explains why most of the Nigerian companies could not survive in the long term because managers deceive investors by managing earnings to falsify performance.
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Keywords
Real earnings, Earnings manipulation, Operating performance, Public listed companies