Reliability of Financial Reporting and Companies Attribute: The Nigerian Experience

Abstract

This study examines the impact of quoted companies attributes on the reliability of financial reporting in Nigeria. The objective of the study is to investigate whether there is any significant relationship between companies attributes such as size, profitability, age and size of audit firm and the reliability of financial reporting. The data were collected through a secondary source from fifty-one randomly selected quoted companies in Nigeria for the year 2010. The data were analyzed using multiple regression analysis. Our findings show that there is a significant relationship between company size, profitability, age and reliability of financial reporting and a negative relationship between size of audit firm and reliability of financial reporting in Nigeria. Also, the study reveals that profitability is the major companies’ attribute that influences the overall quality of financial reports reliability in Nigeria. The study recommends that there should be provisions in the law dealing with companies’ attributes which have the potential to impair the quality of financial reporting. Similarly, emphasis should be placed on the qualities possessed by the preparers and those who attest to financial statements to show desired outcome.

Keywords: Reliability, Companies Attributes, Financial Reporting.