Impact of Earnings Management on Market Performance of Listed Consumer Goods Firms in Nigeria

Abstract

This study examined the effect of earnings management on market performance of listed consumer goods firms in Nigeria for the period 2016 to 2025. The study adopted a quantitative research design and utilized panel data from 15 purposively selected firms, giving 150 firm-year observations. Data were sourced from annual reports and analyzed using Fixed Effects regression with robust standard errors. Earnings management was proxied by discretionary accruals, while market performance was measured by market capitalization, Tobin’s Q, and earnings per share, with firm size as control variable. The findings revealed that discretionary accruals has a negative and significant effect on market capitalization and Tobin’s Q. However,  discretionary accruals as a proxy of earnings management has a positive and significant effect on earnings per share. The results suggest that while earnings management improves reported accounting earnings, it erodes investor confidence and reduces market-based performance. The study concludes that earnings management practices undermine market value despite boosting short-term earnings. It is therefore recommended that regulatory bodies strengthen corporate governance and audit oversight, and that investors focus on earnings quality rather than reported figures alone.

Keywords: Earnings Management, Discretionary Accruals, Real Earnings Management, Market Capitalization, Tobin’s Q, Earnings Per Share, Nigeria

DOI: 10.7176/RJFA/17-3-06

Publication date: August 30^th 2026