IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 9 NO. 10 2023
DOI: https://doi.org/10.56201/jafm.v9.no10.2023.pg34.50

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Firm Characteristics and Fraudulent Financial Reporting: An Application of the M-Score Model in Nigeria and Kenya

Ugbah, Andrew A. (PhD), Kanene, Kingsley C., Ofor, Nkechi T. (PhD)

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Abstract

The study examined the impact of firm characteristics on fraudulent financial reporting in Nigeria and Kenya. The objective of the study was to examine the impact of firm size, leverage, institutional ownership and firm profitability on fraudulent reporting. The population of the study comprised of quoted non-financial companies in the Stock Exchange and Nairobi Stock Exchange for the period of 2012 to 2018. The data collected were analysed using descriptive statistics, correlation and robust least square regression analysis. It was observed from the descriptive statistics that there is presence of fraudulent financial reporting among the quoted non-financial companies in Nigeria and Kenya. The regression results revealed that the firm size was statistically insignificant; leverage was statistically significant, institutional ownership was statistically insignificant in Nigeria and firm profitability was statistically. The study recommended that shareholders and investors in Nigeria and Kenya should invest in lowly leverage firms because it high leverage firm increases the level of fraudulent financial reporting.

keywords:

Beneish M-Score, Fraudulent Financial Reporting, Firm Size, Institutional

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References:

Abata, M.A., & Migiro, S.O. (2016). Corporate governance and management of earnings:
Empirical evidence from selected Nigerian-listed companies. Investment Management and
Financial Innovations, 13(2/1), 189-205.

Adebayo, P.A., & Adebiyi, W.K. (2016). Effect of firm characteristics on the timeliness of
Corporate financial reporting: Evidence from Nigerian deposit money banks.
International Journal of Economics, Commerce and Man agement, 4(3), 369-381.

Adeduro, A.A. (1998). An investigation into frauds in banks. An unpublished thesis of
University of Lagos. Adeniji, A. A. (2004). Auditing and investigation Lagos: Value
Analysis Consult.

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