ACCOUNTING ETHICAL STANDARDS AND FIRMS’ PERFORMANCE IN NIGERIA

Abstract

The research was carried out to ascertain the effect of ethical standard on firm performance.
Ethical standards ensure that accountants acts in public interest and protects the client or
employing firm from any form of unprofessional behaviour that may come from the
accountant. The broad objective of this study is to investigate the effect of accounting ethics
on firms’ performance. Primary data were used for the study. The research adopted a survey
design method to draw data from respondents and questionnaires administered to
respondents. The questionnaires were distributed to professional accountants in eastern
Nigeria. A total of 300 questionnaires were distributed through random sampling to
sampled professionals’ opinion, which only 255 questionnaires were dully filled which
constitute the valid questionnaire used for analysis. The validity of the questionnaire is done
using the Cronbach Alpha criteria stipulated in section 3 of the study. The Cronbach Alpha
coefficient of 0.9910>0.5 in the study. The data collected were analysed using ordinary least
square (OLS).The results showed that the null hypothesis is rejected and the alternative
accepted in respect to OBJ and PBH while the null hypothesis is accepted and the
alternative rejected in respect to INJ, CMP, and CNF in H1; In H2, the null hypothesis is
rejected and the alternative accepted in respect to INJ, CMP and PBH while the null
hypothesis is accepted and the alternative rejected in respect to OBJ and CNF and H3; the
null hypothesis is rejected and the alternative accepted in respect to INJ and CNF while the
null hypothesis is accepted and the alternative rejected in respect to OBJ, CMP and PBH.
The research recommends that managers should enhance adherence to the existing ethical
standards and policies, ensuring they are well-communicated to all employees. Emphasize
the importance of ethical behavior in accounting and financial reporting could strengthen
the companies’ policy that will likely improve their financial performance in terms of return
on equity; the corporate governance structures should promote a culture of accountability
where employees are encouraged to report any unethical behavior or accounting
irregularities they come across. This may close leakages and increase the return on assets
as financial performance index for the companies and the managers should tie employee
performance evaluations and incentives to ethical behavior in accounting and financial
reporting. They should further recognize and reward employees who consistently
demonstrate ethical conduct towards whistle blowing issues of fraud in the company that
may affect the profitability of the company negatively.