CORPORATE SUSTAINABILITY DISCLOSURE AND EARNINGS MANAGEMENT PRACTICES OF PREMIUM BOARD COMPANIES LISTED ON THE NIGERIAN EXCHANGE GROUP (NGX)

This research investigates the influence of corporate sustainability disclosure on earnings management within companies listed on the Premium Board of the Nigerian Exchange Group (NGX). The study specifically assesses how disclosures related to environmental, social, and governance (ESG) factors affect the propensity for earnings manipulation. Employing an ex post facto research design, the analysis is based on secondary data collected over a ten-year period from 2014 to 2023. To determine the relationship between the variables, a robust least squares regression technique was utilized. The results indicate that environmental sustainability disclosure significantly curtails earnings management (B=−0.4473, p<0.001), suggesting it fosters greater transparency and corporate accountability. Conversely, social sustainability disclosure demonstrated a positive and significant correlation with earnings management (B=0.5264, p<0.001), implying that engagement in social initiatives might create unintended incentives for manipulating financial reports. The impact of governance sustainability disclosure was not found to be statistically significant (B=0.1307, p=0.1046). Regarding control variables, firm size was observed to have a significant positive relationship with earnings management (B=0.0486, p<0.001), whereas leverage did not show a significant link (B=−0.0045, p=0.4086). In light of these outcomes, the study puts forward a recommendation for regulators and policymakers to reassess and amend disclosure frameworks to mitigate the adverse consequences associated with social sustainability reporting. Enhancing regulatory supervision and mandating third-party verification could bolster the capacity of sustainability disclosures to deter earnings management and champion ethical financial conduct.