ACCOUNTING CONSERVATISM AND FINANCIAL PERFORMANCE OF LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA

This study examined the effect of accounting conservatism on the financial performance of listed industrial goods firms in Nigeria. Specifically, the study assessed the effects of earnings conservatism and balance sheet conservatism on Return on Assets (ROA) and Return on Equity (ROE). The study was anchored on Positive Accounting Theory and Agency Theory. An ex-post facto research design was adopted, while a quantitative panel data approach was employed. The population comprised listed industrial goods firms operating in Nigeria, from which firms with complete and relevant financial information for the period 2020–2024 were purposively selected. Secondary data were obtained from the audited annual financial statements of the selected firms. Descriptive statistics and multiple regression analysis were employed to analyse the data and test the formulated hypotheses. The findings revealed that earnings conservatism had a positive and significant effect on ROA and ROE, while balance sheet conservatism also had a positive and significant effect on ROA and ROE. The regression models explained 55.1% of the variation in ROA and 61.0% of the variation in ROE, with both models being statistically significant. The study concludes that accounting conservatism is an important factor influencing the financial performance of manufacturing firms. It recommends that manufacturing firms strengthen prudent earnings recognition and balance sheet valuation practices, while regulatory authorities should enhance oversight and compliance with applicable financial reporting standards. Appropriate application of accounting conservatism is expected to improve the reliability of financial information, reduce information asymmetry, and enhance corporate financial performance