EFFECT OF BOARD CHARACTERISTICS ON EARNINGS MANAGEMENT PRACTICES OF LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA

The legitimate and strategic manipulation of financial statements to achieve specific financial outcomes tend to have serious adverse effects on investors, regulators, stability of the financial market and the overall performance of the firm. The independent variables of the study are board independence (BODI), board gender diversity (BOGD) and board meeting (BODM) while the dependent variable is measured using the discretionary accruals approach (DA). The study is conducted using ex-post facto research design on a sample of 11 listed industrial goods firms from a population of 17 listed industrial goods firms in Nigeria. The researcher conducts pool least square regression analysis then check for inconsistencies with the basic assumptions of the least square regression estimation technique. Succinctly, the diagnostics tests include test of multicollinearity, normality test as well as test of heteroscedasticity. Preliminary regression analysis which includes descriptive statistics and correlation matrix. Overall, the empirical findings are mixed as board independence (BODI) has a positive significant effect on earnings management practices (DA) of the firms while board gender diversity (BOGD) and board meeting (BODM) was found to insignificantly affect earnings management (DA) of the listed firms positively. The study concludes that an increase in the amount of number of females on the board and total number of meetings of the board will insignificantly increase the earnings management practices of the firms or not affect it t all while an increase in the independence of the board will increase the earnings management practices of the industrial goods firms listed during the period under study. The study recommends that industrial goods firms in Nigeria board of directors’ composition should be made up of executive and non-executive directors other than the independent ones as they were found to increase earnings management practices. Despite the insignificant positive effect of women on boards on earnings management, it is advisable for industrial goods firms to consider and promote gender diversity in their leadership. While the study suggests a limited impact, gender diversity can contribute to a broader range of perspectives and skills within the boardroom. it is recommended that firms focus on the quality rather than the quantity of board meetings. Instead of solely increasing the frequency of meetings, firms should ensure that each board meeting is productive, allowing for in-depth discussions on key financial and strategic matters. Emphasizing thorough oversight, active participation, and strategic guidance during board meetings can contribute to effective governance without necessarily leading to increased earnings management.