GREY DIRECTORS AND EARNINGS MANAGEMENT OF PUBLICLY TRADED FIRMS IN NIGERIA
Keywords:
Discretionary Accruals, Earnings Management, Grey DirectorsAbstract
This study investigates the influence of grey directors on earnings management in Nigerian publicly traded manufacturing firms. Grey directors, often considered as independent directors with some affiliations, play a crucial role in corporate governance by potentially mitigating earnings manipulation. This research utilizes a combination of theoretical and empirical reviews to explore the effects of grey directors’ independence and size on earnings management. The study employs ex post facto research design and a sample of 13 Deposit Money Banks (DMBs) listed on the Nigerian Exchange Group (NGX) were selected. The study utilises secondary data from annual financial reports which were analysed using Fixed Effects Model. The results showed a positive effect of board size on the discretionary accruals proxy for earnings management; and a non-significant negative effect of grey directors’ independence on earnings management of quoted DMBs. The study concludes that grey directors’ significantly affect financial reporting quality. The study recommends that companies carefully consider the balance of grey directors’ independence on the board and ensure that they possess the necessary industry expertise and training to fulfill their oversight responsibilities effectively. Secondly, shareholders should carefully consider the appropriate size and composition of the board. It is recommended that companies assess the specific needs of their industry, company size, and complexity to determine the optimal board size and composition. These insights suggest that improving board effectiveness might require more than just increasing the number of non-executive directors; it might also involve enhancing the independence and authority of these directors to ensure robust oversight and reduce earnings management.
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Journal of Global Accounting
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Articles submitted to JOGA should not have been published or are currently under review by another Journal. Kindly see the guide for the preparation of the manuscript for details. Successful submission of articles by author(s) for publication clearly implies that the work is not an infringement of any existing copyright warranty as JOGA reserves the right to be indemnified by the author(s) where any breach of such warranty is proven. For ease of dissemination and to ensure proper policing of use, papers and contributions become the legal copyright of JOGA once published unless otherwise agreed.
Permission clearance should be obtained by the author(s) where applicable for the use of any content of interest not originally created by them. This must be done before the submission of the article to JOGA. Failure to do so may lead to a lengthy delay in publication, as JOGA is unable to publish any article which has permissions pending. Thus, the rights JOGA requires are:
- Non-exclusive right to reproduce the material in the article or book chapters.
- Print and electronic rights.
- To use the material for the life of the work (for instance, there should be no time restrictions on the re-use of material).
Where tables, figures or excerpts of more than 250 words are reproduced from another source, it is expected that:
- Author(s) should obtain the necessary written permission in advance from any third-party owner of the copyright for the use in print and electronic formats of any of their text, illustrations, graphics, or other material in their manuscript. Permission must also be cleared for any minor adaptations of any work not originally created by the author(s). The author (s) should not assume that any content freely available on the web is free to use.
- Where the author adapts a significant number of any material, the author(s) must inform the copyright holder of the original work.
- Author obtains any proof of consent statements
- The author must acknowledge figure(s) and content adopted or adapted in work utilizing source(s) and further capture them in the list of references.
