Corporate Governance and Leverage Implications on Firms’ Profitability, Cash Flows and Value in Nigeria

The paper examines the implications of Corporate Governance and leverage on firm profitability (ROA), value (MPS) and cash flows (FCF). The study utilized the agency, stewardship and free cash flow theories. The correlation research design was employed and data collected from ten (10) listed manufacturing firms in Nigeria between the period 2009-2018. The data was analysed for descriptive and correlation properties, with the research hypotheses tested through regression analysis. The results of the study indicates that independent boards have significant negative influence on debt usage, board size does not have a significant effect on debt capital, CEO duality positively impacts the usage of debt financing. The results also indicate that independent boards (BIND) have significant impact on ROA, FCF and MPS, BSIZE is found to exert no statistically significant impact on the financial performance variables, CEO duality negatively impacts both FCF and MPS of the sampled manufacturing firms in Nigeria. Furthermore, the impact of DEBT on ROA and FCF are found to be negative, with the negative effect on ROA being statistically insignificant at the 0.05 level (-0.015, (0.6846)), and the negative effect on FCF being statistically significant at the 0.05 alpha level. The research concludes that the research therefore upholds that capital structure, corporate governance board characteristics and financial performance of manufacturing firms listed on the NSE are significantly related at the 0.05 level. The study recommended that the role of the CEO and board chairman be separated and current debt levels in the manufacturing industry be maintained. Keywords: Corporate Governance, Leverage, Firm Profitability, Firm Cash Flows, Firm Value DOI: 10.7176/RJFA/10-24-04 Publication date: December 31st 201

Audit Quality Effects on Earnings Management of Manufacturing Firms in Nigeria: A Comparative Study of Pre- and Post-International Financial Reporting Standard (IFRS) Period

This study examined the effect of audit quality proxied by Auditors’ Independence (ADI), Audit Firm Size (AFS), Auditor Tenure (ADT) and Audit Firm Specialization (ADS) on shareholders’ earnings (measured as Earnings per Share - EPS) and stock performance (measured as Market Price of Stock - MPS) of listed manufacturing companies in Nigeria, in the pre-and post-International Financial Reporting Standard (IFRS) periods. To achieve this, the study used eleven (11) listed manufacturing companies listed companies that had consistently published their audited annual financial reports from 2009 to 2018. Descriptive statistics, correlation analysis and Ordinary Least Square (OLS) univariate and multiple regression technique were adopted to analyse data obtained, with the ex-post facto research design employed in the methodology. The following results were obtained from the test of hypotheses. Auditors independence, audit firm size and auditors firm specialization have significant and positive impact on EPS and MPS. However, auditors’ tenure was found to significantly affect both EPS and MPS negatively. The IFRS moderated model results revealed that audit quality variables have higher and more positive impact on EPS and MPS in the post-IFRS period, relative to the pre-IFRS, with their effects being statistically significant using the wald restriction test. The findings have direct implication on earnings management and stock performance in the Nigerian Manufacturing Industry. Keywords: Earnings Per Share, Market Price, Auditors’ Independence, Audit Firm Size, Audit Tenure, Audit Firm Specialization DOI: 10.7176/RJFA/10-24-03 Publication date: December 31st 201