ACCOUNTING CONSERVATISM, FIRM CHARACTERISTICS AND PERFORMANCE OF LISTED CONSUMER GOODS FIRMS IN NIGERIA

Abstract

The performance of publicly quoted consumer goods companies in Nigeria continues to attract significant attention due to persistent fluctuations in profitability. Although accounting conservatism is intended to enhance the credibility of financial reports, its influence on firm performance remains uncertain, as existing empirical evidence provides mixed and inconclusive results. This study examined the effect of accounting conservatism and firm characteristics on the performance of listed consumer goods companies in Nigeria from 2014 to 2023. An ex post facto research design was adopted, and secondary data were obtained from the annual reports of 18 consumer goods companies listed on the Nigerian Exchange Group (NGX), representing the entire population of firms in the sector during the study period. Return on Assets (ROA) was used to measure firm performance, while accounting conservatism, firm size, financial leverage, and asset tangibility served as the explanatory variables. The Panel Estimated Generalised Least Squares (PEGLS) technique was employed to analyze the data and address issues of heteroskedasticity and serial correlation. The findings revealed that accounting conservatism had a negative and insignificant effect on firm performance (β = –0.0003, p = 0.8213). Firm size exerted a significant negative effect (β = –0.0671, p = 0.0088), whereas financial leverage had a positive and highly significant effect (β = 0.2789, p = 0.0000). The study reveals that best practices for finance and asset utilization have the most significant impact on a company's success, while accounting practices are not as crucial. It encourages the careful use of debt finance, optimization of processes in large companies and fair distribution of assets to increase profitability and long-term sustainability.