Corporate Governance and Accounting Ethics in Nigeria

Abstract

Corporate managers have being in recent times exploiting the loop holes in accounting standards to manipulate earnings. Earnings management/creative accounting/financial engineering as its being called is considered to be a deliberate attempt to arrive at a desired level of earnings using different means. Through whatever means this is an unethical practice. The study examines the relationship between Corporate Governance mechanisms and accounting ethics in Nigeria. Data for the study were obtained from Nigerian Stock Exchange fact books and Companies financial reports. The extent of influence of corporate governance mechanisms was estimated by probit analysis. Firms under study were dichotomized into two: those involved in earnings management and those with less evidence of management. The probit regression results reveal significance positive influence of Board size, board composition and negative influence of board composition on ethical accounting practices. The findings is a clear testimony that enforcing corporate governance code will reduce significantly unethical accounting practices there by improving quality of accounting information.

Keywords: Corporate Governance, Board Composition, Board Size, Dividend Payment, Accounting ethics