Impact of Corporate Governance Mechanism in Mitigating Creative Accounting Practice of Listed Conglomerate Companies in Nigeria

Abstract

This study examined the impact of corporate governance mechanism in mitigating creative accounting practice of listed conglomerate companies in Nigeria. The study used Secondary data obtained from the company’s annual reports and accounts for the period 2013 to 2020. The population of the study includes six conglomerate companies listed on the Nigeria Stock Exchange and the entire population was used for the study. The dependent variable creative accounting was measured using discretionary accruals as estimated by modified Jones model. The independent variable corporate governance mechanism was proxied by audit committee, board size, board independence, managerial ownership. Multiple regression technique was employed for the panel data analysis using Stata version 13 statistical tools. Findings of the study revealed that audit committee has negative significant impact on creative accounting practice. Managerial ownership has significant positive impact on creative accounting practice. Board size and board independence has no significant impact on creative accounting practice of listed conglomerate companies in Nigeria. The study concludes that good corporate governance have impact on creative accounting practice. Based on these findings, the study recommends that companies are to effectively apply good corporate governance mechanism. They should have an independent audit committee, so as to minimize creative accounting practice.