The Impact of Corporate Characteristics on Real Earnings Management in Nigerian Financial Institutions

Corporate managers are often confronted with the challenge of identifying which corporate characteristics influence the quality of their organizations’ financial reports. This study examines the effect of corporate characteristics on real earnings management among listed financial institutions in Nigeria. All financial institutions quoted on the Nigerian Stock Exchange constitute the population of the study, while a sample of forty-five institutions with accounting year-ends of 31st December was selected. Secondary data were obtained from the annual financial reports of the sampled institutions covering the period from 2018 to 2023, sourced from the official website of the Nigerian Stock Exchange. A correlation research design was employed to examine the relationship between the independent and dependent variables while controlling for other relevant factors. Descriptive statistics, correlation analysis, and Driscoll–Kraay standard error regression techniques were used to test the study’s hypotheses. The findings reveal that profitability and firm size have a significant positive effect on real earnings management among Nigerian financial institutions. The study recommends that regulatory authorities strengthen oversight mechanisms and improve the quality of financial reporting, particularly in the area of discretionary expenses, to promote transparency and accountability in reported earnings.