Association between Corporate Attributes and Extent of Compliance with Accounting Standards Disclosures by commercialized federal Government enterprises in Nigeria

Abstract

Prior studies’ findings on accounting disclosures showeddiverse relationships between accounting disclosures and firm attributes. Similarly, the Report of the Auditor-General for the Federation on Audited Financial Statements of commercialised enterprises indicated that these enterprises complied partially with the disclosure requirements of relevant accounting standards in preparing financial statements in Nigeria. The objective of this research therefore,wasto confirm or refute the findings of these priorstudies and the reports of the Auditor-General. To achieve this, the study examined the relationship between extent of compliance with accounting standards disclosures and firm size, leverage, liquidity, audit firm size, professional qualification, and firm effects using the audited accounts of commercialised Federal Government enterprises in Nigeria. The theoretical framework linking disclosure practices to corporate attributes and firm effects of commercialised enterprises was based on four theories- agency, stewardship, stakeholders, and resource dependence theories. Contents analysis method was used for data gathering and descriptive statistics and regression analysiswere employed for secondary data analysis. Based on the analyses conducted, the results showedsignificant p-values of the regression tests for some of the firm attributes such as firm size 0.035, audit firm size 0.000 and professional qualification 0.000; while some of the regression p-values were insignificant, such as leverage 0.128 and liquidity 0.429 at 0.05 levels of significance. Therefore,these results showed that firm size, audit firm size and professional qualification are significantly related to the levels of compliance with accounting standards disclosure requirements and leverage and liquidity are not significantly related to the levels of compliance with accounting standards disclosures.In addition, the difference of the overall values of the Coefficient of Determination was 33.98%. This means that 33.98% variations in the levels of accounting disclosures are due to the firm effects factors. The results also showed that disclosure indices of commercialised enterprises in Nigeria are low, compared with the cross-country disclosure index benchmark of 91% for emerging economies like Nigeria. The study suggested four possible ways of increasing investment in assets to improve accounting disclosures. These include: full commercialisation, privatization, government and private partnership, reforms in the share guarantee status of the commercialized enterprises to allow private investors to come in and government’s fulfilment of the performance agreement promised to the Governing Boards of these enterprises.These recommendations if implemented would improve the disclosure levels (quality of financial statements) because the amount of assets, quality of accountants and audit firms hired for accounting and audit works would improve.