Corporate governance and financial statements’ fraud: Evidence from listed firms in Nigeria

Abstract

This study examined selected corporate governance measures as possible determinants of financial statements' fraud among listed Nigerian non-financial firms. By relying on secondary data from a total of 20 Nigerian non-financial listed firms within a period of 10 years (2012 to 2021), the study adopted the ex-post facto research design and data on the independent variable (board independence [BI], CEO tenure [CEOT] and institutional ownership [IOWN]) were regressed against the computed data for the dependent variable -financial statements' fraud (measured using Beneish M-Score). Relevant tools like the descriptive statistics, diagnostic tests and regression techniques were used during the analytical process. Evidence from this study indicate that even though the literature documents the occurrence of prior cases of financial statements' fraud, variables like board independence, CEO tenure and institutional ownership could not on their own, exert significant influence on the perpetration of financial statements' fraud among listed non-financial firms in Nigeria. Given these outcomes, this study recommends that future revision of the existing governance codes for entities in Nigeria should focus more on developing a holistic approach to combating financial statements' fraud rather than placing too much emphasis on the structure and independence of corporate boards or the tenure of CEOs. Also, strong internal checks and controls with rigorous auditing processes alongside effective risk management systems should be part of the strategical discourse of listed entities.