THE INFLUENCE OF CORPORATE DISCLOSURE QUALITY ON EARNINGS MANAGEMENT OF LISTED CONGLOMERATES IN NIGERIA

The study was conducted to examine the influence of corporate disclosure on earnings management of listed Conglomerates in Nigeria. The panel data collected was analysed using multiple regression model. However, the findings revealed that the explanatory variables such as liquidity, leverage, and age of firms are significant to minimizing earnings management of listed Conglomerates firms in Nigeria . Finally, the study recommended that the listed Conglomerates firms should increase their leverage levels, which apart from enjoying the benefits of debt financing such as tax shield, provides an incentive to corporate disclosure quality, among others.


INTRODUCTION
The quest for producing quality financial report has become a global phenomenon. The global financial crises of the 1930s, 2008, and the recent one in 2015 to 2016 necessitated the demand for unbiased financial reporting, with the accounting figures not just free of error, but also a true reflection of an organization's activities for the period being reported. Shehu & Farouk (2014) observe that due to the financial crises, accounting earnings reported by corporations may be far from being relevant, reliable and effective. Regulators and other stakeholders place a very high premium on the veracity of financial report. The truthfulness of the report depends on the reliability of reported earnings. This desired need could make management to become subjective in the way it recognizes, measure and allocate values to certain items of expenditure and revenues in the financial report. Pattaraporn (2016) observes that investors give more attention to earnings in the financial reports more than other accounting information; therefore, management becomes prone to influencing accounting earnings in order to meet investors' expectations. According to Shehu (2013) due to income smoothening activities, management can manipulate certain items in the financials to achieve a desired result. Manipulation of earnings impairs on the quality of financial statement and diminishes investors' confidence (Shehu & Abubakar, 2012).
Earnings management raises a fundamental concern to investors' as it wears down the quality of financial reports. How earnings are recognized and measured is essential to the quality of financial reporting. Corporations, through their managers are duty bound to report business activities for the benefit of shareholders, potential investors, regulators/policy makers, suppliers of finance and other stakeholders. This is usually done through the production of annual reports covering their economic, financial, environmental and social activities. These reports are expected to be high quality information, portraying a true and fair view of transactions (Kibiya et al., 2016). However, the practice of earnings management flaws this process of producing quality financial reports and questions the credibility of the quality of reported earnings (Shehu & Abubakar, 2012).
Previous studies have indicated that there is a dearth of studies on the quality of reported earnings in relation to specific firm characteristics of corporations in Nigeria as affirmed by the findings of Unwuigbe et al. (2015); and Olowokure (2016) did not find any statistical relationship between leverage and disclosure quality. On the contrary, the regression result of the work of Shehu (2013), Shehu and Farouk (2014), Karami & Akhgar (2014); Kim & Yang (2014); and Amr (2016), found positive significant relationship between firm leverage and financial reporting quality. The outcomes of these studies have documented varying and conflicting results, thereby pointing to the inconclusiveness of the subject matter. Besides, though some studies have been carried out in the non-financial sector of the Nigerian economy, to the best of the researchers' knowledge, little or no study have been done in the Conglomerates sector in regards to this study. The choice of studying the Conglomerates sector is hinged on the fact that little or nothing has been said about the disclosure quality of the sector so as to determine the degree to which the managers of these Conglomerates have being able to give account of their stewardship by minimizing or eliminating cooked records from their financial report. On this basis, it is therefore important and equally necessary to identify the factors of disclosure quality that could impact on earnings management.
The broad objective of the study was to examine the influence of corporate disclosure quality earnings management of listed conglomerates in Nigeria. The specific objectives were to: i. examine the effect of the age of a firm on earnings management of listed Conglomerates in Nigeria; ii.
ascertain the impact of leverage on earnings management of listed Conglomerates in Nigeria; and iii. examine the influence of liquidity on earnings management of listed Conglomerates in Nigeria.
The study provided answers to the following research questions of what were the: i. effect of the age of a firm on earnings management of listed Conglomerates in Nigeria? ii.
leverage the firm have as a result of the impact on earnings management of listed Conglomerates in Nigeria? iii. influence of liquidity on earnings management of listed Conglomerates in Nigeria?
The study tested the validity or otherwise of the following hypotheses stated in null hypotheses: HO1: Age of a firm has no significant effect on earnings management of listed Conglomerates in Nigeria. HO2: Leverage of a firm has no significant impact on earnings management of listed Conglomerates in Nigeria. HO3: Liquidity of a firm has no significant influence on earnings management of listed Conglomerates in Nigeria.
The study covers the period of five years, spanning from 2012 to 2016. Smith (2014) defined disclosure and transparency in corporate governance as availing the truth to every stakeholder. Smith adds that by definition if a company is only to let the truth be known that presupposes a passive position on matter disclosure. He opines that the current corporate governance mechanism calls for active disclosure transparency of company's information bringing in a whole new meaning to a firm, as transparent actions put new responsibilities to a firm. According to Organization for Economic Co-operation and Development [OECD] (2012), an appropriate governance framework should ensure timely and accurate disclosure of all material matters, including financial situation, performance, ownership and governance of a company at least once a year, or twice a year, or quarterly, and if possible every month. The quest for material development according to OECD is that users are bound to take up information that is omission or misstatement which could negatively influence economic decisions. The OECD also stipulates that firms should simultaneously disclose information to all shareholders without creating unreasonable administration or cost burdens. Further, according to Solomon & Solomon (2004), transparency in corporate governance is an important element of a well-functioning system. Disclosure therefore involves information emanating from the firm and ranges from financial statements; the profit and loss account, cash flow statement and balance sheet to other mandatory reports like AGM and management forecast (Healy & Palepu, 2001). Indeed, studies on disclosure and corporate performance of firms have yielded various results. Bhagat and Bolton (2008), for instance, studied the importance of disclosure in preventing financial fraud in the money market, and established that when self-interest behaviour veers into criminality, true transparency may cast light on financial malpractice activities that could lead to a change in behaviour. The study further observed that increased transparency is important to the future success of corporate governance. The study underscored that transparent disclosure is the only practice that is likely to deter fraud, embezzlement and financial scandals -the necessary conduct that can enhance the fostering of efficiency in allocation of investments across companies and regions. The study concluded that rules, regulations, laws, concepts, structures, processes, best practices and most progressive use of technology cannot ensure transparency and accountability, which can only come about when individuals of integrity do the right thing. A study by Patel et al., (2002) found that when a firm embraces higher transparency and disclosure, the information asymmetry is considerably reduced. The findings suggested that firms with higher levels of disclosure and transparency are more valued than firms with lower disclosure and transparency; meaning that improved disclosure and transparency implies strong corporate governance practices leading to better firm performance. Chiang & Chia (2005) established that transparency and disclosure has a significant positive relationship with corporate performance and termed it as the most important indicator for measuring firm performance. On the same line, Fan and Wong (2005) argue that disclosure of material information like related-party transactions, external audit results and insider transaction are a priority in financial reporting disclosure. Lewis & Mallat (2009) observe that disclosure and transparency in stock markets play crucial roles in corporate governance, allowing organizations to publish data on key management practices, such as financial and non-financial statements, corporate social responsibility (CSR) activities and audit reports. They add that, such an approach enable shareholders become aware of issues affecting their investments. This constitutes an important aspect of shareholder theory, that the directors of the company should manage it on behalf of the shareholders.
According to Epstein & Buhovoc (2006), shareholders need all information about the capital they have invested in a company that is managed by corporate directors in order to ascertain that their interests are being taken care of. Shareholders need also be familiar with procedures and strategies that have been put in place to reduce costs in the event of failure of management to perform its duties. Often times, disclosures have revealed faults within companies and conflicts of interests between management and shareholders. Finally, information disclosure is a key factor in the determination of the value of a company, the trading of its shares in the stock market, and the appointment and exemption of directors (Epstein & Buhovoc, 2006).
One of the most influential factors that can be used to measure disclosure quality is earnings management transparency (Patel et al., 2002). Managers use earnings management base on financial reporting viewpoint to avoid reporting losses from the companies' financial transactions or to meet analysts' forecasts, thereby hoping to avoid damage reputation and strong negative share price reaction that will lead to a failure to meet company investors' expectations. When managers' are more concerned about share price effects and requiring greater reporting transparency, they should reduce value of earnings management to improve transparency (Hunton et al., 2006). Theories suggest that detection of earnings management is easier resulting from improved transparency which should reduce the expected value of earnings management.
Earnings management occurs as a result when managers' use personal judgement in financial statement and in structuring transactions to alter financial reports to either deceive some stakeholders about the fundamental economic performance of the company or to influence contractual outcomes that depend on the reported accounting figures. Earnings management involves potential wrongdoing, mischief, conflict, and a sense of mystery. Managers are less likely to manage earnings if they have professional designations and subscribe to codes of ethical conduct. Earnings management can be classified into two different categories: The real earnings management that is affecting cash flows and accruals management through accounting policies and changes in estimates (Egbunike & Falolu, 2015). The real earnings are costly to the company and mangers are keen to engage, hence such actions are harder to detect (Lo, 2008). This is consistent with the study on accrual-based and real earnings management activities around equity offerings adopted by Cohen & Zarowin (2010). The study suggested that managers prefer real earnings management compared to accrualbased because managers are less likely to be scrutinized by auditors, regulators, and thus have likely to greater probability of not been detected. However, when managers engage in real earnings management, three possible manipulation methods occurred; acceleration of the timing of sales through increased price discounts, reporting of lower cost of goods sold through increased production, and decreases in discretionary expenses including advertising and research and development (R&D) expenses. Marai & Pavlovic (2013) reported that earnings management practices through accounting accruals usually result financial fraud which involve using estimates or judgments allowed by managers, such as expected lives and rescuing values of long-term assets, obligations for pension benefits and other post-employment benefits. The study by Tandeloo & Vanstrelen (2011) viewed earnings management as a way of assessing the quality of reported earnings by examining to what extent earnings are managed, with the intention to either mislead some stakeholders about the underlying economic performance of the company. The study reported that managers were significantly encouraged to engage in earnings smoothing after the adoption of International Financial Reporting Standard (IFRS) especially if company does not have a Big 4 auditor. Managing earnings is "a purposeful intervention in the external financial reporting process, with the intent to obtaining some private gain as opposed to say, simply facilitating the neutral operation of the process (Schipper, 1989;cited in Beneish, 2001). Therefore, if managers allowed too much earnings management, which implies window dressing of financial information in the company's financial statements, it would mislead investors to make poor investment decisions, hence financial reports is of no quality; thus the essence of disclosure quality is defeated, which is transparent presentation of information in annual reports of listed firms.
The Agency Theory serves as the foundation for this study. The agency theory defines the principal-agent relationship. The principal here are shareholders while agents refer to the managers. These parties have divergent interests, thus giving rise to agency costs, Shehata (2014). Disclosure quality by way of financial reporting and regulation help to mitigate the agency problem as it requires that management of corporations report both mandatory and voluntary information for the benefit of shareholders and other interest parties. By and large, since managers have first-hand information about operations of a business, they are duty bound by the agency theory to report as appropriate to the owners of the businesses. Disclosure of financial information lessens agency costs and also makes it easy for creditors to evaluate the volatility of a company, and likely ask more information to safeguard their resources (Botosan & Plumlee, 2002;Fathi, 2013;and Echobu et al., 2017).
In the study conducted by Huang, Ena, and Lee (2012) and Chalaki, Didar, and Riahnezhad (2012) found that age is not statistically significant with financial reporting quality. Hossain (2008) also reported insignificant relationship. The result of the study of non-financials firms in Nigeria by Kibiya et al. (2016) found a significant association between age and financial reporting quality. Marginally positive impact of the IFRS adoption on disclosure has been found by Bokpin (2013) in his study on the capital market of Ghana. According to this study, firm size, financial leverage, age of the company, its profitability and the audit quality have been found to be significant firm level characteristics determining corporate disclosure. Shehu & Ahmad (2013); and Shehata et al., (2014), however, reported a negative significant relationship. Aljifri et al. (2014) found an insignificant relationship in their study.
Mendes-Da-Silva & Onusic (2014) analyzed the link between certain firm characteristics and the web-based disclosure which is taking prevalence over other methods of disclosing data and changing the entire disclosure ambiance. Although the size of the company and the acceptance of best corporate governance practices have proven their expected positive impact on transparency, somewhat surprising outcome has been the negative impact of the length of the period of company listing on the stock exchange.
In a more recent study, Ahmed (2015) explores the determinants of the quality of disclosed earnings in ten European transition economies. He finds significant cross-country differences of the relevant factors, where the ownership structure plays important role in determining the quality of disclosure in most transparent countries, while financial factors are a more significant determinant in the countries with poorer disclosure practices. The findings of Amr (2016); and Shehu & Farouk (2014) revealed a positive significant relationship between liquidity and financial reporting quality. Aksu & Espahbodi (2016) investigate the behaviour of the companies listed on the Istanbul Stock Exchange to determine if mandatory or voluntary regulation provides better results in terms of disclosure quality. They find out that the mandatory implementation of International Financial Reporting Standards (IFRS) have had positive impact on the transparency disclosure practices of the Turkish firms. From the empirical studies reviewed, there is a dearth of study on the relationship between disclosure quality and earnings management of listed Conglomerate firms in Nigeria, which is the gap the study, intends to fill.

Research Design
In selecting the choice of research method to be used by a researcher for the purpose of acquisition, analysis and interpretation of data, it was very paramount to put in mind the nature of the study, the problem at hand and the desired objective. In line with this, Ex-post facto design was adopted for the study, which means that the data employed for the purpose of analysis are already in existence.

Population and Sample Size of the Study
The population of this study is made up of the six (6) (5) Conglomerates, which are A.G. Leventis Nigeria Plc.; Chellarams Plc.; John Holt Plc.; SCOA Nigeria Plc.; and Transnational Corporation of Nigeria; using a filtering system to eliminate UACN Plc. This filtering system is that a conglomerate should have data available within the period of the study and it is also expected that neither of the listed firms would have been deleted within the years under consideration.

Sources and Method of Data Collection
Secondary sources of data were employed. This secondary data were sourced from annual reports and accounts of the selected listed Conglomerates. The data employed were panel data.

Analytical Techniques
The multiple regression analysis using Ordinary Least square (OLS) was employed to test the influence of corporate disclosure quality on the earnings management of listed Conglomerates in Nigeria. The model specified below follow the model specification of Echobu et al. (2016) to examine the influence of corporate disclosure quality on the earnings management of listed Conglomerates in Nigeria. E_M = β0 + β1Age + β2Lev + β3Liq + Er …(1) where; E_M = Earnings management; Age = Age of the firm; Lev = Leverage of the firm; and Liq. = Liquidity; β0, β1, β2, β3 = the coefficient of the variables.

Variable Definition
The measurement of variables as shown in the model specification are shown Table 1.

Justification for the Technique Used
Multiple regression analysis was used because it tries to forecast a normal or scale dependent variable from a combination of several scale and/or dichotomous independent/predictor variables. The multiple regression analysis using the Ordinary Least Square (OLS) method was employed with the aid of Statistical Package for the Social Sciences (SPSS), which was used to analyze the data. This was based on the premise that Ajani (2012) stated that the Ordinary Least Square (OLS) is a multiple regression analysis method where it is assumed that all of the predictor variables are important. Multiple regressions using Ordinary Least Square (OLS) allows the researcher to consider all the variables at the same time.

RESULTS AND DISCUSSION Analysis of the Regression Results
The Table 2 depicts the outcomes obtained from the tests conducted on the data collected for the study. This is followed by drawing relevant inferences from the analysis as well as the test of hypotheses formulated for the study. Table 2 indicates that the R which represents the correlation coefficient shows a strong explanation of 0.730, while the more crucial variable R squared shows an output of 0.534, which signifies that changes associated with the response variable (earnings management) is captured by the changes in the explanatory variable (corporate disclosure quality). From Table 2, 53.4% R squared indicates that earnings management are affected by the explanatory variables captured in the study. This could mean that about 46.6% of variables not captured in this study but serves as determinants of corporate disclosure quality could impact on earnings management, which could be in the interest of the shareholders. The implication of this finding is that as pronounced as the earnings management practices could have seemed in other sectors, the listed Conglomerate firms have being able to keep it low in other to eroding public confidence.  Table 3 presents the results of the Analysis of Variance table (ANOVA). The results showed a significant regression at the 1% level of significance with F statistics of 8.009 showing the fitness of the model. This implied that the findings from this analysis can be relied upon at 99% confidence level.

Analysis of the Coefficients a of Variables
According to the results in Table 4, the tolerance value statistics are consistently greater than the common benchmark of .10 and also the Variance Inflation Factor in relation to all the variables considered are consistently less than 10. These confirm the absence of multicollinearity in between the explanatory variables. In addition, Table 3 shows the regression results on the influence of corporate disclosure quality on earnings management. The estimated regression equation for the model is E_M = -0.103 -0.154 (LNAge) + 0.035 (LEV) + 0.226 (LIQ). The model indicates how the results show the coefficient of determination for the model, which is fitted at 1%. This coefficient measures the proportion of the total variation in the earnings management as explained by the corporate disclosure quality, which is 53.4%. In addition, the study provides evidence that the age of the firm is significant at 10% and negatively associated with earnings management, this provides grounds to reject the null hypothesis, which states that the age of the firm has no significant effect on earnings management. The age of a firm is considered as one of the essential determinants of financial reporting quality as Soodanian & Kheirollahi (2013) affirmed that older firms have better internal controls, which is significant to strong internal controls. This affirms that internal control system of a firm gets stronger with age, and a strong and well-structured internal control system guarantees corporate disclosure quality. As firms advance in age, they also improve in their governance mechanisms, and as a result, become more closely monitored by government regulatory agencies. This is expected to produce a corresponding improved disclosure quality. This result is consistent with prior findings of Kibiya et al. (2016). However, this result is contrary to the findings of Hossain (2008) (2018) More so, a positive and significant relationship at 1% between leverage and earnings management is found in this study. This could mean that disclosure of financial information lessens agency costs and also makes it easy for creditors to evaluate the volatility of a company, and likely ask more information to safeguard their resources. This position is consistent with the findings of Botosan and Plumlee, (2002) and Fathi (2013), Amr (2016), among others. However, this is contrary to the findings of Fathi, (2013); Unwuigbe et al. (2015); and Olowokure et al. (2016).
The study, therefore, provides a positive and significant association between liquidity and earnings management. This could mean that a firm with good financial performance indices such as liquidity has more inducement to provide earnings information of higher quality, while firms with very impressive liquidity are more likely to disclose information on their performance to investors and other stakeholders. On the other hand, firms with low liquidity may also reveal more information to show that management is aware of the company's position and to avoid claims my shareholders. Thus, the null hypothesis is also rejected. This result is in tandem with the findings of Shehu & Farouk (2014); Amr (2016), and Aksu & Espahbodi (2016) among others.

CONCLUSION AND RECMMENDATIONS
The study concluded that the age of Conglomerates, their leverage, and liquidity have significant influence in minimizing or eliminating earnings management through quality disclosure. The following recommendations were made from the findings of the study: 1. Conglomerates may increase their leverage levels, which apart from enjoying the benefits of debt financing such as tax shield, provides an incentive to corporate disclosure quality. 2. Similarly, a good liquidity position should be maintained as it has been found not only to preserve the going concern of the Conglomerates but also a strong feature for enhancing the quality disclosure. 3. Finally, the Nigerian Stock Exchange (NSE) should review its monitoring rules to ensure definite rules for the prevention of window dressing behaviour of management in financial reporting. This will further boost investors' confidence in listed Conglomerates in the NSE.