FINANCIAL MANAGEMENT PRACTICES AND EARNINGS MANAGEMENT OF LISTED HEALTHCARE FIRMS IN NIGERIA

Abstract

The study examines the relationship between financial management practices on earnings management of listed healthcare firms in Nigeria. For empirical analysis the study employed panel stationarity tests and Autoregressive Distributed Lag. The presence of mixed order integration among the variables necessitated the adoption of the Autoregressive Distributed Lag model. For model one, it was discovered that internal rate of return and debt-to-equity ratio have no significant relationship with earnings smoothing. For model two, the results indicate that internal rate of return has a positive and significant relationship with discretionary accruals, while debt-to-equity ratio has a negative and significant relationship with discretionary accruals. Based on these findings, it is recommended that there is urgent need for firms to explore alternative mechanisms such as cost control and operational efficiency to maintain stable earnings rather than leveraging debt-driven financial adjustments