MODERATING EARNINGS MANAGEMENT IN NIGERIA: HARNESSING FREE CASH FLOW, INSTITUTIONAL OWNERSHIP AND AUDIT COMMITTEE INDEPENDENCE
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Free cash flow in the Nigerian non-financial firm is related to earnings management (EMT), which has been identified as one of the main culprits leading to catastrophic fraudulent and financial reporting scandals, resulting in huge losses that shareholders can suffer in billions of Naira and dollars. This study examines the Moderating impact of institutional ownership and audit committee independence on the relationship between FCF and EMT of listed non-financial companies in Nigeria. The analysis relies on balanced panel data of seventy-six (76) from 2012 to 2022 and uses purposeful sampling to arrive at a sample of 39. The study's findings suggested that FCF is a resource that triggers managers to engage in EMT. Still, interacting with IWN and ACI has a significant positive impact on EMTs. This implies that the presence of IWN and ACI can reduce the EMT. Thus, the Study recommended that authorities like IFRS, CBN, FRCN, NDIC, SEC, and NSE encourage the manager to invest FCF in projects with net present value. Institutional investors should encourage financial analysts to expose FCF so that investors can make optimal decisions. ACI should use its position to discourage corporate executives from opportunistic behavior. IWN and ACI should monitor the managers to ensure that accounting numbers in the financial statement are correctly calculated and reported in their disclosure.
JEL Classification Codes: M1, M4, A1, G3, G4, L2.
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