Earnings Management and Shareholders’ Wealth of Manufacturing Firms in Nigeria

This study examined the effect of earnings management on shareholders’ wealth of manufacturing firms in Nigeria, with specific focus on Nestlé Nigeria Plc. Earnings management remains a critical issue in financial reporting because managerial discretion over accounting choices and operational decisions may influence reported earnings and investors’ assessment of firm value. The study was motivated by concerns regarding the quality of financial reporting and the possible implications of earnings manipulation on shareholders’ returns. Earnings management was considered the independent variable, while shareholders’ wealth was the dependent variable. The study measured shareholders’ wealth using Earnings Per Share (EPS), while earnings management was examined through accrual earnings management and real earnings management. The study adopted an ex-post facto research design and utilised secondary data obtained from the annual reports and audited financial statements of Nestlé Nigeria Plc covering the period 2016–2025. Data were analysed using descriptive statistics and ordinary least squares regression analysis. The findings revealed that earnings management has a positive and statistically significant effect on shareholders’ wealth, with a coefficient of 23.22235 and a probability value of 0.0020, indicating that changes in earnings management practices significantly influence earnings per share. The regression model further showed a high explanatory power, with an R-squared value of 0.937840. The study concludes that managerial reporting practices significantly influence shareholders’ wealth and recommends the promotion of transparent financial reporting practices and effective corporate governance mechanisms to enhance investor confidence and sustainable value creation.

Earnings Management, Shareholders’ Wealth, Accrual Earnings Management, Real Earnings Management, Financial Reporting.

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