Corporate Governance Mechanisms and Creative Accounting Practices: Empirical Insight from Nigerian Listed Insurance Companies
Keywords:
Discretionary accruals, Insurance companies, Nigeria, Emerging markets, Board independence, Audit committeeAbstract
Objectives - This study examines the connection between corporate governance (CG) metrics and creative accounting practices in Nigerian Exchange Group-listed insurance companies. Prior Work - The study seeks to address a critical gap in emerging-market research on the role of weak institutional frameworks in enabling earnings manipulation. Approach –Using panel regression analysis, we analyze 80 firm-year data from 16 listed insurance firms spanning a five-year period (2020–2024). Creative accounting practices are proxied by discretionary accruals using the Modified Jones Model, while board size, board independence, audit committee effectiveness, and ownership concentration represent CG. Results –Contrary to theoretical expectations, the results reveal no statistically significant relationships between the examined metrics of CG and the creative accounting practices proxy. Implications -These outcomes indicate the insufficiency of formal governance structures in constraining earnings manipulation in contexts characterized by weak enforcement and institutional voids and stress the need to examine informal institutions’ enforcement mechanisms and cultural factors that shape accounting behavior in emerging markets. Value - This study contributes to the limited empirical evidence on CG effectiveness in African insurance markets, challenging the universal applicability of agency theory-based governance prescriptions, highlighting the need for insurance companies to prioritize substantive governance reforms over symbolic compliance.
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