Ownership Structure and Real Earnings Management in Nigeria : The Moderating Effect of Risk Management Committee

This study examines whether the existence of a separate risk management committee can moderate the relationship between ownership structure (managerial, institutional, and foreign) on real earnings management. The data are obtained from 360 firm-year observations for five years (2015-2019). Panel Corrected Standard Error is employed to analyze the data studied. The findings show that the existence of risk management committee along with managerial ownership are likely to prevent managers from engaging in real earnings management. Additionally, despite the positive effect of institutional ownership and foreign ownership on real earnings management, the presence of risk management committee can influence institutional and foreign investors with short-term investment motives and exercise efficient monitoring and reduce the frequency of manipulating. The result give understanding to investors, regulators, and financial analyst that the moderating effect of risk management committee on the ownership structure (managerial, institutional, and foreign) would strengthen the corporate board monitoring and deter management from engaging in perpetual unethical practice such as earnings management.