Empirical Investigation into the Relationship between Accounting Conservatism and Financial Performance: Evidence from Manufacturing Companies in Nigeria.

Abstract

In a nation like Nigeria, the manufacturing sector has a lot of potential to boost competitiveness and economic growth. According to studies, the manufacturing industry has been unstable throughout time due to various financial situations, which has caused a drop and fluctuation in the financial performance of Nigerian manufacturing companies. As a result, there is an urgent need for high-quality accounting. This study looked into the relationship between accounting conservatism and financial performance of manufacturing companies in Nigeria. An ex post facto research design was used in the study. As of December 31, 2022, there were twenty consumer products manufacturing companies listed on the Nigerian Exchange Group. Of these, sixteen companies were specifically chosen for the study. The study period was 12 years which spanned from 2011 to 2022. Information was taken from the publicly available audited financial accounts, which were verified by the certification of the external auditors. Descriptive and inferential statistics were used in the study's data analysis. The study's conclusions showed that Return on Asset (ROA) was significantly impacted by Accounting conservatism and AC together, with AdjR2 = 0.1980; F= 14.09, p = 0.000. According to the study's findings, manufacturing companies listed in Nigeria can improve their financial performance by applying accounting conservatism. It was suggested that managers of manufacturing companies address knowledge asymmetry by implementing conservative financial management techniques. This is because conservatism improves the performance of the manufacturing company