Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa

Saheed Akande Shittu; Hakeem Olayinka Onifade

doi:doi:10.11648/j.jfa.20231105.12

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Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa

Saheed Akande Shittu, Hakeem Olayinka Onifade

Published in Journal of Finance and Accounting (Volume 11, Issue 5)

Received: 15 August 2023 Accepted: 13 September 2023 Published: 27 September 2023

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Abstract

This study assesses the impact of capital structure (CS) on Earnings Management Practices (EMP) in selected firms in sub-Sahara Africa. EMP was proxied by real EMP using Rowchodhury's (2006) model and accrual EMP measured by Khothari et al. (2005) model. The study applied the Generalized Method of Moments (GMM) estimator to data collected from the financial statements of two hundred and seventy-six (276) firms purposively selected from Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe from 2010 to 2020, given 3,069 observations firm-years. The results show that firms in Kenya, Nigeria, and Tanzania partake in real EMP through the structure of their capital. However, firms in Ghana, South Africa, and Zimbabwe do not partake in real EMP through the structure of their capital. Furthermore, the findings reveal that firms in Ghana and South Africa use their capital structure to embark on accrual EMP, while firms in Nigeria, Kenya, and Zimbabwe do not. The study concludes that firms in selected countries in sub-Saharan Africa substitute real and accrual forms of EMP. Therefore, the study recommends that capital providers in Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe should maintain sufficient attention to both real and accrual EMP for sustainable leveraging and the management of opportunistic selections of accounting choices, but increase the use of real EMP.

Published in	Journal of Finance and Accounting (Volume 11, Issue 5)
DOI	10.11648/j.jfa.20231105.12
Page(s)	155-163
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Capital Structure, Accrual, Real, Earnings Management Practices, Sub-Saharan Africa

References

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Saheed Akande Shittu, Hakeem Olayinka Onifade. (2023). Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa. Journal of Finance and Accounting, 11(5), 155-163. https://doi.org/10.11648/j.jfa.20231105.12

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Saheed Akande Shittu; Hakeem Olayinka Onifade. Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa. J. Finance Account. 2023, 11(5), 155-163. doi: 10.11648/j.jfa.20231105.12

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Saheed Akande Shittu, Hakeem Olayinka Onifade. Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa. J Finance Account. 2023;11(5):155-163. doi: 10.11648/j.jfa.20231105.12

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@article{10.11648/j.jfa.20231105.12,
  author = {Saheed Akande Shittu and Hakeem Olayinka Onifade},
  title = {Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa},
  journal = {Journal of Finance and Accounting},
  volume = {11},
  number = {5},
  pages = {155-163},
  doi = {10.11648/j.jfa.20231105.12},
  url = {https://doi.org/10.11648/j.jfa.20231105.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20231105.12},
  abstract = {This study assesses the impact of capital structure (CS) on Earnings Management Practices (EMP) in selected firms in sub-Sahara Africa. EMP was proxied by real EMP using Rowchodhury's (2006) model and accrual EMP measured by Khothari et al. (2005) model. The study applied the Generalized Method of Moments (GMM) estimator to data collected from the financial statements of two hundred and seventy-six (276) firms purposively selected from Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe from 2010 to 2020, given 3,069 observations firm-years. The results show that firms in Kenya, Nigeria, and Tanzania partake in real EMP through the structure of their capital. However, firms in Ghana, South Africa, and Zimbabwe do not partake in real EMP through the structure of their capital. Furthermore, the findings reveal that firms in Ghana and South Africa use their capital structure to embark on accrual EMP, while firms in Nigeria, Kenya, and Zimbabwe do not. The study concludes that firms in selected countries in sub-Saharan Africa substitute real and accrual forms of EMP. Therefore, the study recommends that capital providers in Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe should maintain sufficient attention to both real and accrual EMP for sustainable leveraging and the management of opportunistic selections of accounting choices, but increase the use of real EMP.},
 year = {2023}
}

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TY  - JOUR
T1  - Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa
AU  - Saheed Akande Shittu
AU  - Hakeem Olayinka Onifade
Y1  - 2023/09/27
PY  - 2023
N1  - https://doi.org/10.11648/j.jfa.20231105.12
DO  - 10.11648/j.jfa.20231105.12
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 155
EP  - 163
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20231105.12
AB  - This study assesses the impact of capital structure (CS) on Earnings Management Practices (EMP) in selected firms in sub-Sahara Africa. EMP was proxied by real EMP using Rowchodhury's (2006) model and accrual EMP measured by Khothari et al. (2005) model. The study applied the Generalized Method of Moments (GMM) estimator to data collected from the financial statements of two hundred and seventy-six (276) firms purposively selected from Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe from 2010 to 2020, given 3,069 observations firm-years. The results show that firms in Kenya, Nigeria, and Tanzania partake in real EMP through the structure of their capital. However, firms in Ghana, South Africa, and Zimbabwe do not partake in real EMP through the structure of their capital. Furthermore, the findings reveal that firms in Ghana and South Africa use their capital structure to embark on accrual EMP, while firms in Nigeria, Kenya, and Zimbabwe do not. The study concludes that firms in selected countries in sub-Saharan Africa substitute real and accrual forms of EMP. Therefore, the study recommends that capital providers in Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe should maintain sufficient attention to both real and accrual EMP for sustainable leveraging and the management of opportunistic selections of accounting choices, but increase the use of real EMP.
VL  - 11
IS  - 5
ER  -

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Author Information

Saheed Akande Shittu

Department of Accountancy, Federal Polytechnic Ayede, Nigeria
Hakeem Olayinka Onifade

Department of Accounting, Crescent University, Abeokuta, Nigeria

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APA Style

Saheed Akande Shittu, Hakeem Olayinka Onifade. (2023). Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa. Journal of Finance and Accounting, 11(5), 155-163. https://doi.org/10.11648/j.jfa.20231105.12

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ACS Style

Saheed Akande Shittu; Hakeem Olayinka Onifade. Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa. J. Finance Account. 2023, 11(5), 155-163. doi: 10.11648/j.jfa.20231105.12

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AMA Style

Saheed Akande Shittu, Hakeem Olayinka Onifade. Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa. J Finance Account. 2023;11(5):155-163. doi: 10.11648/j.jfa.20231105.12

Copy | Download

@article{10.11648/j.jfa.20231105.12,
  author = {Saheed Akande Shittu and Hakeem Olayinka Onifade},
  title = {Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa},
  journal = {Journal of Finance and Accounting},
  volume = {11},
  number = {5},
  pages = {155-163},
  doi = {10.11648/j.jfa.20231105.12},
  url = {https://doi.org/10.11648/j.jfa.20231105.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20231105.12},
  abstract = {This study assesses the impact of capital structure (CS) on Earnings Management Practices (EMP) in selected firms in sub-Sahara Africa. EMP was proxied by real EMP using Rowchodhury's (2006) model and accrual EMP measured by Khothari et al. (2005) model. The study applied the Generalized Method of Moments (GMM) estimator to data collected from the financial statements of two hundred and seventy-six (276) firms purposively selected from Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe from 2010 to 2020, given 3,069 observations firm-years. The results show that firms in Kenya, Nigeria, and Tanzania partake in real EMP through the structure of their capital. However, firms in Ghana, South Africa, and Zimbabwe do not partake in real EMP through the structure of their capital. Furthermore, the findings reveal that firms in Ghana and South Africa use their capital structure to embark on accrual EMP, while firms in Nigeria, Kenya, and Zimbabwe do not. The study concludes that firms in selected countries in sub-Saharan Africa substitute real and accrual forms of EMP. Therefore, the study recommends that capital providers in Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe should maintain sufficient attention to both real and accrual EMP for sustainable leveraging and the management of opportunistic selections of accounting choices, but increase the use of real EMP.},
 year = {2023}
}

Copy | Download

TY  - JOUR
T1  - Capital Structure and Earnings Management Practices: Empirical Analysis in Sub-Sahara Africa
AU  - Saheed Akande Shittu
AU  - Hakeem Olayinka Onifade
Y1  - 2023/09/27
PY  - 2023
N1  - https://doi.org/10.11648/j.jfa.20231105.12
DO  - 10.11648/j.jfa.20231105.12
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 155
EP  - 163
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20231105.12
AB  - This study assesses the impact of capital structure (CS) on Earnings Management Practices (EMP) in selected firms in sub-Sahara Africa. EMP was proxied by real EMP using Rowchodhury's (2006) model and accrual EMP measured by Khothari et al. (2005) model. The study applied the Generalized Method of Moments (GMM) estimator to data collected from the financial statements of two hundred and seventy-six (276) firms purposively selected from Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe from 2010 to 2020, given 3,069 observations firm-years. The results show that firms in Kenya, Nigeria, and Tanzania partake in real EMP through the structure of their capital. However, firms in Ghana, South Africa, and Zimbabwe do not partake in real EMP through the structure of their capital. Furthermore, the findings reveal that firms in Ghana and South Africa use their capital structure to embark on accrual EMP, while firms in Nigeria, Kenya, and Zimbabwe do not. The study concludes that firms in selected countries in sub-Saharan Africa substitute real and accrual forms of EMP. Therefore, the study recommends that capital providers in Nigeria, Ghana, Kenya, Tanzania, South Africa, and Zimbabwe should maintain sufficient attention to both real and accrual EMP for sustainable leveraging and the management of opportunistic selections of accounting choices, but increase the use of real EMP.
VL  - 11
IS  - 5
ER  -

Copy | Download