Firm Characteristics and Financial Reporting Quality: Evidence from Non-Financial Firms in Nigeria

  • Kenny Adedapo Soyemi Olabisi Onabanjo University, Nigeria
  • Luqman Samuel Olawale Olabisi Onabanjo University
Keywords: Accruals quality, Firm size, Growth, Profitability, Tangibility


This study examined the impact of firm’s characteristics on the quality of financial reporting of listed manufacturing firms in Nigeria. Some 25 non-financial firms listed on the Nigeria stock exchange from 2009 to 2016 comprised the sample. The study used longitudinal balanced panel data from secondary sources only because it is a quantitative with positivism paradigm and the core of the data needed for analysis were adequately and conveniently extracted from the audited financial reports of the selected firms within the study period. Multiple regression is adopted to examine the model of the study. Longitudinal panel data is used to account for individual heterogeneity of the sample companies with the utilization of two steps regression in determining the quality of financial reports of the Nigerian listed manufacturing firms adopting modified Dechow and Dichev’s (2002) model. The firm characteristics are firm size, firm tangibility, profitability and growth. The result revealed that firm size has positive significant effect on financial reporting quality. Tangibility has negative significant effect on audit financial reporting quality. Firm’s profitability has also been argued to have a positive influence on the quality of financial reporting while firm growth has negative significant effect on financial reporting quality. Hence large firms tend to produce high quality financial reports; this should be encouraged among firms. This study also revealed that highly profitable have high financial reporting. Thus, profitability should be a good indicator of poor or good financial reports. On the other hand, tangibility and firm growth has negative effect on financial reporting quality; this follows the predictions of the accruals model which predicts that earning manipulation can be influenced by Plant, Property and Equipment (PPE). Hence, tangibility of asset should be discouraged among non-financial firms. It is therefore recommended that all the firm characteristics used in this study except tangibility and firm growth should be encouraged by the regulating agencies of government (Securities and Exchange Commission and Corporate Affairs Commission) and all other stakeholders in the Nigerian non-financial firms because of the role firm characteristics play in constraining managers to act opportunistically in preparing financial statements.



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How to Cite
Adedapo Soyemi, K., & Olawale, L. S. (2019). Firm Characteristics and Financial Reporting Quality: Evidence from Non-Financial Firms in Nigeria. International Journal of Economics, Management and Accounting, 27(2), 445-472. Retrieved from