FINANCIAL STATEMENT FRAUD AND FINANCIAL PERFORMANCE OF SELECTED FOOD BEVERAGE COMPANIES IN NIGERIA

Abstract

Financial statement fraud is a matter of concern. This empirical study aims to evaluate the impact of financial statement fraud and financial performance of selected food and beverage companies in Nigeria. The proxies for the independent variable (Financial statement fraud) were improper expense recognition, and incorrect asset valuation. The proxy used for the dependent variable (financial performance) was return on assets (ROA). The specific objectives were to ascertain the effect of improper expense recognition on return on assets (ROA) and also to ascertain the effect of incorrect asset valuation on return on assets (ROA). Descriptive research design was adopted for the study while secondary data were collected from the financial reports of the selected firms and website of security and exchange commission. The analysis of covariance (ANCOVA) was used and STATA II econometric method was used in the analysis of the data. Altman model and operating expenses ratio was adopted in the analysis of the financial reports to create a dummy variable for the selected firms from 2004-2018 and validation of the parameters were ascertained using various statistical techniques such as t-test, co-efficient of determination (R2), F-statistics and Wald £hi-square. The findings revealed that there is a significant relationship between financial statement fraud and financial performance of selected food and beverage companies in Nigeria. The study recommended that pragmatic policy options need to be taken to effectively manage t1Lproper expense recognition and incorrect asset valuation so as to improve the financial performance of food and beverage companies in the country.