Corporate Governance and the Value Relevance of Earnings

Askia Samuel OGIEH^*1 and Edirin JEROH²

¹Post Graduate Student, Accounting Department, Delta State University, Abraka - Nigeria

²Associate Professor, Accounting Department, Delta State University, Abraka - Nigeria

Article History

Received: 10.09.2022

Accepted: 30.09.2022

Published: 10.10.2022

Abstract: This study investigates corporate governance effects on the relevance of earnings using empirical data from listed Nigerian firms outside the financial service sector. We identified pertinent models that aided the analytical processes and test of hypotheses and were anchored by the conceptual framework and major goal of the study. Ownership structure, board shareholding, independence, size, and diligence were used as measures of corporate governance. Also included as control variable was market capitalization, a proxy for corporate size. The secondary data that were compiled from the financial statements of 73 sampled companies and retrieved after collation were correctly analyzed. The information used spanned a decade (2011 to 2020). The results of pertinent diagnostic tests (unit root, multi-collinearity, heteroscedasticity, etc.) supported using robust regression to test our hypothesis. Results indicate that corporate governance significantly impacts on the earnings of firms. Accordingly, regulatory bodies should continue to stress the importance of companies adhering to the minimum standards for board independence, size, and diligence. This is because, observably, some companies' corporate boards continue to meet irregularly, which undermines their ability to perform the expected oversight function.

Keywords: Share price, Earnings Per Share, Nigeria, Accounting Information, Corporate Governance