MODERATING EFFECT OF INSTITUTIONAL OWNERSHIP ON BOARD DIVERSITY AND EARNINGS MANAGEMENT OF QUOTED SERVICES FIRMS IN NIGERIA

ABSTRACT The practice of earnings manipulation undermines the credibility of financial reporting, leading to a misrepresentation of a firm’s financial health and potentially misleading stakeholders. Despite global efforts to enhance corporate governance frameworks, including the emphasis on board diversity, the effectiveness of these measures in curbing earnings management varies across different contexts. This study examined the moderating effect of institutional ownership on board diversity and earnings management of quoted services firms in Nigeria. The population of this study consists of all the twenty-two (22) quoted service firms in Nigeria while seventeen (17) service firms were used as the sample size. The hypotheses were tested using a random effect regression model after conducting diagnostic tests. The results show that board size has a significant negative effect on earning management of quoted service firms in Nigeria. However, the study shows that board meeting frequency has an insignificant positive effect on earnings management of quoted service firms in Nigeria. Also, the study further shows that institutional ownership has significantly moderates the relationship between board size and earning management of quoted service firms in Nigeria. Also, the study found that institutional ownership does not significantly moderate the relationship between board meeting frequency and earning management of quoted service firms in Nigeria. The study recommends that the that service firms in Nigeria should consider increasing their board size to enhance the effectiveness of their governance structures. A larger board brings diverse expertise and viewpoints that improve decision-making and monitoring of financial activities. Firms should ensure that board expansion is done strategically, focusing on the inclusion of members with diverse skills, relevant experience, and a commitment to ethical financial reporting.

0 19 May, 2026

pg: 13

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