CORPORATE REPORTING AND FINANCIAL PERFORMANCE: EVIDENCE FROM LISTED MANUFACTURING FIRMS IN NIGERIA

Abstract
This study examined the effect of corporate reporting quality on financial performance of listed manufacturing firms in Nigeria. The study employed ex-post facto research design and secondary data was collected from forty (40) manufacturing firms listed on the floor of the Nigerian Stock Exchange for the period 2014 to 2018. The data were analyzed using simple regression analysis techniques. The findings of the study align with Stewardship Theory. Specifically, the study found out that earnings quality has no significant effect on Return on Asset, but has a significant effect on Profit after Tax. The study concludes that earnings quality is greatly an essential tool to financial information users, because the earnings of companies are generally supposed to be important information components presented in financial statements. The study also recommends adequate evaluation and examination of manufacturing firms’ financial statements and that adequate procedures should be put in place for early detection of earnings management practices by listed manufacturing firms in Nigeria.
Key words: Earnings quality, corporate reporting quality, profit after tax, and return on asset, financial performance.
Introduction
The importance of delivering high-quality financial reports has gotten a lot of attention recently all over the world. It is vital to include high-quality financial reporting evidence because it can favourably impact capital suppliers and other customers while making acquisition, credit, and other resource allocation decisions, thus improving overall business performance (International Accounting Standards Board, 2013). According to the IASB, conformity to the factual and qualitative characteristics of financial reporting information is a key requirement quality in financial reporting for corporate information to be beneficial. Relevance, faithful description, comparability, verifiability, timeliness, and understandability are examples of qualitative characteristics that make financial data useful. Relevance and transparency, which make knowledge valuable for policy makers, are the key metrics of financial information accuracy, according to the authors of accounting Standards (Nwaobia, Kwarbai, Kwarbai, & Ajibade, 2016).
Many financial and accounting analysts have reported the advantages and role of financial reporting quality (Chan-Jane, Tawei & Chae-Jung, 2015; Jaballah, Yousfi, & Ali, 2014). They have also stated that poor financial reporting quality will negatively impact business efficiency and economic decisions (Chan-Jane et al, 2015; Jaballah, Yousfi, & Ali, 2014). This means that the consistency of financial reporting can affect managers’ willingness to participate in inefficient practices. It will also help investors have greater leverage of their investment decisions. As a result, high-quality financial reporting is supposed to minimize unnecessary and wasteful expenditures (Biddle, Hilary, Rodrigo, & Verdi, 2009).
Corporate reporting is an important component of a company’s value and a key factor in improving efficiency. It works as a tool to reduce buyer anxiety and increase marketing efficiency and customer loyalty.