IIARD International Institute of Academic Research and Development

WORLD JOURNAL OF ENTREPRENEURIAL DEVELOPMENT STUDIES (WJEDS )

E-ISSN 2579-0544
P-ISSN 2695-2483
VOL. 9 NO. 6 2024
DOI: 10.56201/wjeds.v9.no6.2024.pg111.129

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Ownership Structure and Earnings Management of Listed Pharmaceutical Companies in Nigeria

Ogiriki Tonye (PhD) ; Tonye Buseri

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Abstract

The reliability and credibility of financial reporting of companies are regularly being subjected to excruciating scrutiny as a result of the face of unwholesome manipulation of the earning figures by executives of these companies. Thus, this study examine how the ownership composition of listed pharmaceutical companies in Nigeria correlates with the way these companies manage their earnings. Specifically, the goal the research were to investigate the relationship between managerial ownership, institutional ownership and block holder ownership (used as measures of ownership structure) on one hand, and discretionary accruals (proxy of earnings management) on the other hand. Using multiple regression analysis with the aid of STATA 16 output as a tool of data analysis, relevant data was obtained from the 2019 to 2023 annual reports of three listed pharmaceutical companies selected as sample size of this study (out of a population size of seven listed pharmaceutical companies). The study's findings showed that there is a positive and significant association between blockholder ownership and earnings management, while there is a negative and substantial interplay between managerial and institutional ownership. It follows that ownership composition and earnings management of Nigerian listed pharmaceutical businesses have a negative and substantial association. The study's conclusions suggest that pharmaceutical businesses should decrease shareholder ownership while simultaneously increasing managerial and institutional ownership to counteract profit management inclinations.

keywords:

Ownership structure, Block holder ownership, Managerial ownership, Institutional

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