Corporate governance and the credibility of financial statements in Nigeria
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Date
2009
Authors
Dabor, E. L.
Adeyemi, S. B.
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Business Systems, Governance and Ethics, Victoria University, Australia
Abstract
Optimal decision-making is based on the quality of information available to the decision maker. Financial statements published by companies are the major sources of financial information available to investors and other stakeholders of the company. The credibility of these financial statements has very salient implications for the quality of decisions that investors can make. By using primary data collected from two hundred and forty eight respondents, and secondary data from twenty quoted companies in Nigeria, we sought to determine the relationship between corporate governance and the credibility of financial statements. The secondary data was analysed using multiple regression, while the primary data was used to test hypotheses using the chi-squared test. We find that including non-executive directors on the board, and compliance with audit committee composition as provided by the Nigerian Companies and Allied Matters Act (CAMA) 1990 are likely to enhance the credibility of financial statements. We did not find evidence to suggest that CEO duality or absence of institutional shareholding would have negative effect on the credibility of financial statements. We recommend that apart from including non-executive directors on the board and ensuring that the composition of the audit committee complies with corporate regulatory framework, stakeholder must constantly assess the credibility of the financial statements by assessing the benefits accruing to them in relation to their financial exposure to the organization.
Description
Scholarly article
Keywords
Corporate governance , CEO-duality , discretionary accrual , audit committee , credibility , Research Subject Categories::SOCIAL SCIENCES
Citation
Dabor, E. L. and Adeyemi, S. B. (2009). Corporate governance and the credibility of financial statements in Nigeria. Journal of Business Systems, Governance and Ethics, Victoria University, Australia, 4(1), 13-24.