Effects Of Leverage Incentive On Earnings Management Strategies Of The Nigerian Listed Manufacturing Firms

📄 Project Abstract

This study assesses the effects of leverage incentive on the three identified earnings management strategies of the Nigerian listed manufacturing firms. To achieve this, the study formulates three hypotheses and uses cross-sectional OLS to estimate accrual and real earnings management using Dechow et'al (2002) and Roychowdhury (2006) models, respectively; as well as Panel OLS and panel logistic regressions to test for the impact of leverage on acrual earnings management, real earnings management and deferred tax earnings management. The hypotheses test models were also subjected to fixed and random effect tests, in which for all the three models, the Hausman specification tests indicate that some of the firms' unobserved specific characteristics are constant over time but varies among panels, while some of these unobserved characteristics varies over time but fixed within panels as such, we analysed the result we controlled for random effects. The study found that while significant pos...