CASH FLOW AND DISCRETIONARY ACCRUALS IN INDUSTRIAL GOODS FIRMS IN NIGERIA: THE MODERATING ROLE OF FIRM’S ATTRIBUTES

Abstract

This study examined the moderating role of firm’s attribute on effect of cash flow and discretionary accruals in listed industrial goods firms in Nigeria. Specifically, the study examined how operating cash flow a proxy for cash flow affected total discretionary accruals and how some firm’s corporate attribute such as board size and leverage level moderate this effect. The study purposively sampled 9 firms out of the 12 industrial goods firms listed on Nigeria exchange group as at December 2024 having consistent audited financial statement. The secondary data used were extracted from the annual reports for the periods spanning from 2015 to 2024 financial year. The study adopted ex-post facto research design. Descriptive and inferential statistics were carried out on the collected data and the formulated hypotheses were tested at 5% significant level using Panel estimated generalized least square regression method. The findings revealed that Operating cash flow significantly reduces discretionary accruals, with a coefficient of -1.313 and p-value 0.000, indicating a negative effect, Board size significantly moderates the effect of cash flow on discretionary accruals; larger boards increase the negative effect of OCF (-0.193, p = 0.000) and lastly Leverage level significantly moderates the effect of cash flow on discretionary accruals; higher leverage strengthens the negative effect of OCF (-0.855, p = 0.000). The study therefore recommended that management of industrial goods firms should focus on maintaining strong operating cash flows through efficient operations and cost management, board nomination committees should consider structuring boards with sufficient members to strengthen oversight and chief finance officers should strategically manage leverage levels