Threat of Bankruptcy and Earnings Management of Listed Consumer Goods Firms in Nigeria

This study investigated the relationship between threat of bankruptcy and earnings management of listed consumer goods firms in Nigeria from 2017-2023. Specifically, the study investigated the extent of the relationship between the study variables (z-score, firm size, leverage as well as firm performance) and earnings management of listed consumer goods firms in Nigeria. Four research questions as well as four hypotheses were raised in order to achieve the objectives of this research work. The research adopted an ex-post facto research design method. Multiple regression analysis using ordinary least square statistical technique was used to test the four hypotheses formulated to guide the study. Secondary data were used in this study which was sourced from Nigerian Stock Exchange fact books and from the financial statements of the eleven selected consumer goods firms under review. The findings revealed that threat of bankruptcy measured using the z-score has no significant relationship with earnings management of listed consumer goods firms in Nigeria. The study has contributed immensely and has offered many benefits to major stakeholders in consumer goods sector especially in formulating path-breaking policies and high-impact strategies that will address bankruptcy risks in Nigeria. This study is expected to assist the investors and creditors by providing information on how to address bankruptcy risk issues. The study is expected to sustain and boost the financial capability and credit worthiness of consumer goods firms in Nigeria.