AN EVALUATION OF CHANNEL-STUFFING PRACTICES IN NIGERIA: A CROSS-SECTORAL APPROACH
Abstract
This study evaluated channel stuffing practice, an under-investigated instrument of earnings management, in Nigeria using a cross-sectoral approach, arising from scanty evidence in cognate empirical literature. Secondary data were collected from Refinitiv Eikon database for one hundred and sixty (169) listed firms
in Nigeria. The data collected covered years 2012 to 2022. Census sampling method was selected as the
entire listed firms in Nigeria were examined. Financial services firms and firms with no dataset were
removed, resulting in eighty (80) firms across ten (10) sectors with data available for meaningful analysis. The variable of interest to this study is channel-stuffing, measured using the ratio of receivable-to-revenue. The data collected were analysed using descriptive statistics of mean, standard deviation, skewness, kurtosis and analysis of variance. Findings revealed that receivable-to-revenue ratio is significantly
different amongst firms and across different sectors in Nigeria (F-statistics = 2.870, p-value < .05). Based
on this evidence, the study concluded that channel-stuffing appears prevalent amongst listed firms in
Nigeria and across different sectors, and this practice is significantly different amongst the sectors in
Nigeria. To stem channel-stuffing practices, the study recommended that regulatory authorities should step
up their oversight responsibilities by subjecting the financials of the firms across these sectors to deeper
scrutiny to uncover channel stuffing and impose deterrent fines to discourage these practices. Keywords: Channel-stuffing, Earnings management, Nigeria, Receivable-Revenue Ratio
Sectoral Approach,
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Published in Journal of Finance, Governance & Strategic Studies
ISSN: 2714-2573
This article appears in our peer-reviewed academic journal
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