Asset Structure and Growth Opportunities: Empirical Analysis on Earnings Management Practices in Sub-Saharan Africa

Authors: Saheed Akande SHITTU , Mathew Iyanda OYEYINMIKA , Adekola Sikirulahi GBOLAGADE (Federal Polytechnic Ayede, Oyo State,) (The Polytechnic Ibadan, LAUTECH, Ogbomos)

Journal: Nigerian Journal Of Technical Education | Volume: 21 | Issue: 1 | Pages: 46 - 58

Keywords: Assets structure, Growth opportunities, Earnings management practices, Sub Saharan Africa.

Abstract

This study assesses the influence of asset structure and growth opportunities on Earnings Management Practices (EMP) amongst firms in sub-Saharan Africa. Both real and accrual EMP were considered. Two hundred and seventy-nine (279) firms were purposively selected across six (6) sub-Saharan African countries for a period of eleven years, from 2010 to 2020, giving a total of 3,069 observations. Data gathered from the financial statements of chosen firms were analyzed using a panel least squares regression model. The findings reveal that asset structure and growth opportunities have a positive and significant effect on accrual and real EMP. Similarly, leverage and firm size have a positive and significant effect on real EMP. However, leverage has a negative and significant impacton accrual EMP while firm size has a positive and significant impact on accrual EMP. Also, firm age has no significant influence on both accrual and real EMP. The study concludes that asset structure and growth opportunities positively and significantly influence accrual and real EMP amongst firms in sub-Saharan Africa. Hence, the study recommends that firms in sub-Saharan Africa should refrain from using a larger percentage of their non-current assets as collateral to obtain debt to avoid perpetrating EMP..