CORPORATE GOVERNANCE FAILURE AND EARNINGS MANAGEMENT

This study examined the relationship between corporate governance failure and earnings management practices among listed manufacturing firms in Nigeria. Using an ex-post facto research design, the study analyzed secondary data from 45 manufacturing companies listed on the Nigerian Exchange Group (NGX) over a ten-year period (2013-2022). Corporate governance failure was measured through board independence, board size, audit committee effectiveness, and CEO duality, while earnings management was assessed using discretionary accruals derived from the Modified Jones Model. Multiple regression analysis revealed significant relationships between corporate governance mechanisms and earnings management. Specifically, board independence (β = -0.432, p < 0.05) and audit committee effectiveness (β = -0.387, p < 0.05) demonstrated significant negative relationships with earnings management, while CEO duality (β = 0.514, p < 0.01) showed a significant positive relationship. Board size exhibited no significant relationship (β = 0.087, p > 0.05) with earnings management. The study concluded that weak corporate governance structures facilitate opportunistic earnings management practices in Nigerian manufacturing firms. The findings underscore the need for strengthening board independence, enhancing audit committee functionality, and separating the roles of CEO and board chairman to mitigate earnings manipulation. This research contributes to the corporate governance literature in emerging markets and provides empirical evidence for policy formulation by regulatory authorities in Nigeria.