BOARD CHARACTERISTICS AND EARNINGS MANAGEMENT OF LISTED CONSUMER GOODS COMPANIES IN NIGERIA: A CAUSALITY ANALYSIS

This study examined the relationship between board characteristics (BC) and earnings management (EM) of selected listed consumer goods companies in Nigeria in terms of their causal relationship. The study used a dataset of nineteen (19) consumer goods that were listed on the floor of the Nigeria Exchange Group from 2010 to 2022 It examined how four BC (board size (BDS), gender diversity (BGD), independence (BIN) and frequency of meetings (BMT) as well as logarithm firm size, LOGSIZ (in terms of its assets) was causally related to EM (discretionary accruals) of the companies. The study tested for the stationarity and long run relationship of the research variables and used the Engel Granger causality test to ascertain the presence, strength and direction of causal relationship between BC and EM. Estimates panel Granger causality models revealed that out of all the BCs, only BMT had a significant causal relationship with EM. Specifically, BDS, BGD, BIN and LOGSIZ have no significant causal relationship with DAC as their respective probabilities of F-Statistics are all greater than 0.05 level of significance. However, BMT has a significant unidirectional causality with DAC with the causal effect running from DAC to BMT implying that DAC elicited the frequency of BMT during the period. The study concluded that BC has significant causal effect on EM, at least, in terms of the frequency of board meetings, implying the rejection of the null hypothesis of no significant causality. The study therefore recommended that companies should adopt proactive rather than monitoring mechanisms to detect and mitigate earnings management early and set predefined thresholds or criteria that automatically trigger focused review sessions with oversight functions strategically targeted at specific risk indicators.