ACCOUNTING CONSERVATISM AND OWNERSHIP STRUCTURE IN NON-FINANCIAL LISTED FIRMS IN NIGERIA

Abstract

This study is motivated by the need to provide an understanding of the nexus between ownership structure and accounting conservatism using non-financial listed firms in Nigeria. This study adopts an expost facto research design was then adopted and the study covered the period from 2010-2019. The sample consists of 75 non-financial companies quoted on the Nigerian Stock Exchange (NSE) as at December 31, 2020. In this study, secondary data, by way of annual reports and accounts of the sampled companies in Nigeria and some relevant Nigerian Exchange Group fact books were used to collect data. The effect of ownership structure on accounting conservatism was analysed using panel regression. The findings of the study reveals that ownership structure has a significant impact on accounting conservatism. Particularly, the effect of managerial ownership is persistent particularly for MTB and income statement indicators while the significant effect of foreign ownership holds for MTB measure of accounting conservatism. Therefore, the study recommends that there is need for shareholders to look closely in order to monitor the practices of management as the presence of managerial owners tends to create some level of managerial entrenchment and this can create the lax for managerial opportunist in the use of accounting policies like conservatism. Also, the study recommends that foreign ownership presence be more active in monitoring management use of accounting policies such as conservatism because in most cases foreign owners tend to be more passive in their monitoring responsibility.