Accounting Conservatism and Firm Growth of Listed Industrial Firms in Nigeria: 2006 -2015

Abstract

This study examines the impact of accounting conservatism on the firms growth of listed Industrial firms in Nigeria for a period of 2006-2015.One of the effective factors of growth and development is efficient investment and one of the effective factors of efficient investment is conservatism. The study used documentary data collection from the annual reports and accounts of the sampled companies for the period under review. Descriptive statistics was first used to analyze the data to provide summary statistics for the variables and subsequently correlation analysis was also carried out using spearman rank correlation technique for the dependent and explanatory variables. Multiple regression technique with OLS framework was employed to analyze the data using STATA software 13.00 version. The result of the study shows that there is a positive relationship between accounting conservatism and firm growth. Growth options positively affect investment. However this effect is valid only for firms with high growth opportunities. Leverage affects the relationship between debt maturity and investment. Although, a positive relationship between conservatism and growth financed with long-term debt was obtained, an expectation regarding the association between conservatism and growth through short-term financing is less clear. The findings are robust to various alternative proxies. The study makes some important contributions to the existing literature and has broad implications for standard setters and financial statement users.