IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 10 NO. 6 2024
DOI: 10.56201/jafm.v10.no6.2024.pg157.166

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Effect of Accounting Estimates on Financial Performance of Listed Manufacturing Firms in Nigeria

Ifeanyichukwu, J. C, Nwaorgu, A. I. Ph.D, Okafor, M. C. Ph.D and O. A. Eke, Ph.D

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Abstract

This study empirically investigated the effect of accounting estimates on financial performance of listed manufacturing firms in Nigeria. Since secondary sources of data were employed, this study used ex-post-facto research design. Data for analysis were sourced from consolidated financial statements and annual reports of the sampled listed manufacturing firms for the period 2011 – 2020. The data collected was analyzed using pooled multiple regression. The regression result show there is a very weak relationship between provision for bad debt, provision for employee benefits and profit after tax at 15.9%. Also the R2 stood at 2.5%. Findings from the test of hypotheses revealed that provision for bad debt has a negative insignificant effect on profit after tax of listed manufacturing firms in Nigeria while, provision for employee benefits has a positive insignificant effect on profit after tax of listed manufacturing firms in Nigeria. In consonance with this study’s findings, it is recommended that proper estimates should be made accurately in other to capture the actual bad debt which serves as incurred burden on the firm so as to make adequate plans that will shield such burden against the profit of the firms. Also, Firms should be more focus on their estimates on employees benefits since it can signal as a motivation to the employees. This will enable the firms make policies in regards to their employees and make the right well fare policy in regards the estimates made on employee benefits.

keywords:

Provision For Bad Debt, Provision for Employee Benefits and Profit After Tax

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