Earnings manipulation

This study explored audit committee members' views on the effect of corporate governance codes on real activities manipulation (RAM) in listed Nigerian firms. RAM, including sales, discretionary expenses, and production cost manipulation, was assessed via a survey, forming a composite RAM (CRAM) scale as the dependent variable. The 2003 and 2011 Securities and Exchange Commission (SEC) governance codes served as independent variables. Results showed that Nigerian firms engaged more in sales and discretionary expenses manipulation from 2001 to 2018, but both codes significantly reduced RAM. The study calls for fostering ethical corporate cultures and regularly updating governance codes. As the first study to use audit committee perspectives and parametric analysis on Likert-scale data, it emphasizes strict code compliance and continuous review to mitigate RAM among firms listed on the Nigerian Stock Exchange.

This study investigated audit committee members’ perceptions of real activity manipulations (RAM) among non-financial companies listed in Nigeria between 2001 and 2018. A questionnaire was distributed to the audit committee members of 74 listed firms in Nigeria to gather their opinions on the prevalence of RAM. The study focused on three types of RAM: sales manipulation, discretionary expense manipulation, and production cost manipulation. The results indicate that two of the three
manipulations—sales and discretionary expense manipulation—were prevalent among listed firms in Nigeria during the period under review. The study recommends fostering a strong ethical culture to reduce the occurrence of RAM in listed firms.