ACCOUNTING CONSERVATISM AND PROFITABILITY OF LISTED FIRMS IN NIGERIA

Abstract

Accounting conservatism reinforces and influences regulation to increase legal liability. The avoidance of inappropriate distribution claims by stakeholders as dividends. That has been an important contracting reason for conservative accounting. Measured in asymmetric timeliness and default adjusted Basu as independent and returns on equity as the dependent variable. The panel presents a multiple regression analysis of 11 years of data fixed-effect model as a tool for 2010 – 2020. The Stata version 13 statistical software extracted the secondary source from annual reports of listed firms in Nigeria. The study reported a positively significant relationship between asymmetry timeliness and profitability. The results reveal an unsustainable positive and considerable relationship amongst defaults adjusted Basu and profitability in Nigerian listed firms. The study finding discloses that conservative accounting Basu practice is an efficient management tool in controlling agency problems. Conservatism principle plays a vital role in presenting the true nature of profitability of an entity. The accounting regulatory framework advised to makes conservatism principle known to shed its potentiality to the managers, stakeholders, staff, and interested bodies. To act conservatively in preparing their profitability, monitoring, and decision-making of a firm.