Effect of upper echelons' demographic characteristics on earnings management in troubled non-listed companies in Nigeria

Research has shown that companies in a financial crisis are usually successful in hiding their poor performance through aggressive earnings management at the detriment of stakeholders like investors and loan providers. The wave of current bank loan defaulters rocking the Nigerian banking system afforded a unique opportunity to study earnings management in troubled, non-listed companies in Nigeria to contribute to the attainment of the sustainability goal 9 on industrialization in developing countries. This study aimed at investigating the influence of top management's demographic characteristics on corporate earnings management. Using Slovin's 1960 sampling size formula, 80 non-listed companies were selected for the study from the list of 98 non-listed companies among the debtors of Assets Management Corporation of Nigeria (AMCON). Copies of a questionnaire were administered on 240 financial officers (3 participants per company). Descriptive statistics involved computation of percentages, means and standard deviations while hypotheses were tested with structural equation modelling using AMOS SPSS. Findings revealed a relatively high level of earnings management with significant positive relationships with age, tenure, educational level and gender of the CFOs. Lower earnings management was observed among middle-aged, female, more educated and short-tenure CFOs. The study concludes that there is a positive significant relationship between upper echelons' demographic characteristics and earnings management in troubled, non-listed companies in Nigeria. The study recommends the appointment of more middle-aged, female and financially literate individuals into the upper echelons' positions with a moderate tenure of five to ten years to promote corporate sustainable development in Nigeria.