MODERATING ROLE OF OWNERSHIP STRUCTURE AND THE RELATIONSHIP BETWEEN INSTITUTIONAL OWNERSHIP AND EARNINGS MANAGEMENT OF LISTED MANUFACTURING FIRMS IN NIGERIA
Aliyu Mohammed, Salisu Abubakar, Luka Mailafiya and Aliyu Ahmed Abdullahi
Volume 3 Issue 2
Abstract
The study examine the moderating role of free cash flow and the relationship between institutional ownership and earnings management of listed manufacturing companies in the Nigerian Stock Exchange with specific objectives as to examine the impact free cash flow, institutional ownership and free cash flow as moderator. As a result of the mix finding the study introduced the use of moderating role of free cash flow on firm performance The study maintained a position of Agency theory which is used to pin the study. The population of the study comprises of 76 listed manufacturing companies in the Nigerian Stock Exchange between 1st January 2012- to 31st December 2022. Based on results obtained from inferential statistics performed, the study rejects the entire null hypothesis which stated that free cash flow, free cash flow moderated with institutional ownership and firm size has significant positive impact on firm performance of listed manufacturing firms in Nigeria. The study concluded that institutional shareholders in firms used to reduce the opportunistic behaviour of managers towards earnings management through their active monitoring. The study therefore recommends that the presence of ownership structures such as institutional shareholders in the manufacturing firms may have the potentials in preventing the managers from using their discretion to commit earnings management. In line with the result of the study FCF when moderated with MGW may influence the relationship between MGW and EMT. Therefore, when their relationship is monitored and moderated from time to time it may strengthen their influence over managers in the manufacturing firms that engage in opportunistic behaviour. Keywords: Free Cash Flow; Institutional Ownership, Return On Assets
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