IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v7y2023i9p1221-1242.html
   My bibliography  Save this article

The Influence of Tone at the Top on Financial Statement Fraud of Listed Manufacturing Firms in Nigeria

Author

Listed:
  • Dr. Solomon Abeki

    (Department of Accounting Faculty of Management Sciences Ignatius Ajuru University of Education Nigeria)

  • Aliyu, Abubakar Sadiq; Msc

    (Department of Accounting Faculty of Management Sciences University of Port Harcourt Nigeria)

Abstract

Financial statements prepared by the management remains the umbilical cord that connects the financial health of an enterprise to the various stakeholders who rely on them to take informed economic decision. However, the contemporary global business community has unimaginably been submerged in the recent wave of the shocking death of notable corporate entities sooner after the publication of juicy profits which metamorphosed from the poor and ineffective tone at the top orchestrated by top management in collaboration with the independent external auditors. Most of these corporate collapses were associated with the top management with widely exercised corrupt practices. The inefficient or nonexistence of tone at the top in most of entities contributed to the widespread violations and exploitation of accounting loopholes. These apparent upsurge of recently doctored financial statements frauds have resulted in the impairment of firm’s productivity, operational efficiency, damages reputation for businesses, heavy financial losses, collapse of an entire organization and have severely eroded the stakeholders’ confidence and public trust. The thrust of this study is to establish and develop efficient and formidable tone at the top that will help to ameliorate financial statement fraud rascality in the quoted Nigerian manufacturing sector. Ethical leadership strategy, corporate ethical culture and risk management practices were used as the proxies of tone at the top while improper revenue recognition dimension of the financial statements fraud. The researchers adopted correlational survey design for the study and used primary data via structured questionnaire. The null hypotheses were formulated and tested at 0.05 level of significance and other data were analyzed by Pearson Product Moment Correlation and multiple linear regression model with the aid of Statistical Packages for the Social Sciences version 25. The study found that all the tone at the top proxies; Ethical leadership strategy, corporate ethical culture and risk management practices positively and significantly related to improper revenue recognition of quoted Nigerian manufacturing companies in the period of this study. The study concludes that tone at the top effectively and significantly related with the financial statement fraud. We recommend that the policymakers to prompt manufacturing companies in the country to develop strategies for tone at the top with strong ethical approach where employees will be trained and re-trained on the need always to do what is rightful and needful at every moment in the society and workplace. We also suggest that the parents should give their wards very good upbringing so that they can be useful in society and will be free from all social vices such as fraud.

Suggested Citation

  • Dr. Solomon Abeki & Aliyu, Abubakar Sadiq; Msc, 2023. "The Influence of Tone at the Top on Financial Statement Fraud of Listed Manufacturing Firms in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(9), pages 1221-1242, September.
  • Handle: RePEc:bcp:journl:v:7:y:2023:i:9:p:1221-1242
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-7-issue-9/1221-1242.pdf
    Download Restriction: no

    File URL: https://www.rsisinternational.org/journals/ijriss/articles/the-influence-of-tone-at-the-top-on-financial-statement-fraud-of-listed-manufacturing-firms-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gabriel Sam Ahinful & Sheila Addo & Felix Obeng Boateng & Jeff Danquah Boakye, 2017. "Accounting Ethics and the Professional Accountant: The Case of Ghana," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 1(1), pages 30-36.
    2. Gabriel Sam Ahinful & Sheila Addo & Felix Obeng Boateng & Jeff Danquah Boakye, 2017. "Accounting Ethics and the Professional Accountant: The Case of Ghana," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 1(1), pages 30-36.
    3. Lee Cronbach, 1951. "Coefficient alpha and the internal structure of tests," Psychometrika, Springer;The Psychometric Society, vol. 16(3), pages 297-334, September.
    4. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    5. Chad Albrecht & Daniel Holland & Ricardo Malagueño & Simon Dolan & Shay Tzafrir, 2015. "The Role of Power in Financial Statement Fraud Schemes," Journal of Business Ethics, Springer, vol. 131(4), pages 803-813, November.
    6. Sawsan Saadi Halbouni & Nada Obeid & Abeer Garbou, 2016. "Corporate governance and information technology in fraud prevention and detection," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 31(6/7), pages 589-628, June.
    7. Philip Law, 2011. "Corporate governance and no fraud occurrence in organizations," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 26(6), pages 501-518, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marco Allegrini & Giulio Greco, 2013. "Corporate boards, audit committees and voluntary disclosure: evidence from Italian Listed Companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(1), pages 187-216, February.
    2. Paugam, Luc, 2011. "Valorisation et reporting du goodwill : enjeux théoriques et empiriques," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/8007 edited by Casta, Jean-François.
    3. Saddam A. Hazaea & Ebrahim Mohammed Al-Matari & Saleh F. A. Khatib & Khaldoon Albitar & Jinyu Zhu, 2023. "Internal Auditing in the Arab World: A Systematic Literature Review and Directions for Future Research," SAGE Open, , vol. 13(4), pages 21582440231, October.
    4. Hongjin Zhu & Toru Yoshikawa, 2016. "Contingent value of director identification: The role of government directors in monitoring and resource provision in an emerging economy," Strategic Management Journal, Wiley Blackwell, vol. 37(8), pages 1787-1807, August.
    5. Denton Collins & Gary Fleischman & Stacey Kaden & Juan Manuel Sanchez, 2018. "How Powerful CFOs Camouflage and Exploit Equity-Based Incentive Compensation," Journal of Business Ethics, Springer, vol. 153(2), pages 591-613, December.
    6. Jayasinghe-Mudalige, Udith K. & Henson, Spencer J., 2004. "Quantifying The Impact Of Economic Incentives On Firms' Food Safety Responsiveness: The Case Of Red Meat And Poultry Processing Sector In Canada," 2004 Annual meeting, August 1-4, Denver, CO 20419, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Mohammad A. A. Zaid & Sara T. F. Abuhijleh & María Consuelo Pucheta‐Martínez, 2020. "Ownership structure, stakeholder engagement, and corporate social responsibility policies: The moderating effect of board independence," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(3), pages 1344-1360, May.
    8. Arpita Sharma & Shailesh Rastogi, 2021. "Impact of Efficiency on Voluntary Disclosure of Non-Banking Financial Company—Microfinance Institutions in India," JRFM, MDPI, vol. 14(7), pages 1-21, June.
    9. Xin Qu & Daifei Yao & Majella Percy, 2020. "How the Design of CEO Equity-Based Compensation can Lead to Lower Audit Fees: Evidence from Australia," Journal of Business Ethics, Springer, vol. 163(2), pages 281-308, May.
    10. Conan L. Hom & Daniel Samson & Peter B. Cebon & Christina Cregan, 2021. "Inside the black box: an investigation of non-executive director activity through the lens of dynamic capability," Asia Pacific Journal of Management, Springer, vol. 38(3), pages 857-895, September.
    11. Stefano Azzali & Tatiana Mazza, 2018. "The Internal Audit Effectiveness Evaluated with an Organizational, Process and Relationship Perspective," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(6), pages 238-238, April.
    12. van Oosterhout, J. & Heugens, P.P.M.A.R., 2006. "Much Ado About Nothing: A conceptual critique of CSR," ERIM Report Series Research in Management ERS-2006-040-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    13. Rutledge, Robert W. & Karim, Khondkar E., 1999. "The influence of self-interest and ethical considerations on managers' evaluation judgments," Accounting, Organizations and Society, Elsevier, vol. 24(2), pages 173-184, April.
    14. Muttakin, Mohammad Badrul & Khan, Arifur & Belal, Ataur Rahman, 2015. "Intellectual capital disclosures and corporate governance: An empirical examination," Advances in accounting, Elsevier, vol. 31(2), pages 219-227.
    15. Ashish Pandey & Rajen Gupta & A. Arora, 2009. "Spiritual Climate of Business Organizations and Its Impact on Customers’ Experience," Journal of Business Ethics, Springer, vol. 88(2), pages 313-332, August.
    16. Richard Akisimire & Muhsin Salim Masoud & Mutahyoba D Baisi & Laura A Orobia, 2016. "Board Member Age Diversity and Financial Performance of Manufacturing Firms: A Developing Economy Perspective," Journal of Economics and Behavioral Studies, AMH International, vol. 8(5), pages 120-132.
    17. Yan Tian & Yuan Li & Zelong Wei, 2013. "Managerial Incentive and External Knowledge Acquisition Under Technological Uncertainty: A Nested System Perspective," Systems Research and Behavioral Science, Wiley Blackwell, vol. 30(3), pages 214-228, May.
    18. Vinnari, Eija & Näsi, Salme, 2013. "Financial and technical competence of municipal board members: Empirical evidence from the water sector," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 24(7), pages 488-501.
    19. Shahzad, Ali M. & Mousa, Fariss T. & Sharfman, Mark P., 2016. "The implications of slack heterogeneity for the slack-resources and corporate social performance relationship," Journal of Business Research, Elsevier, vol. 69(12), pages 5964-5971.
    20. Paolo Esposito & Zubair Ahmad & Vincenzo Riso & Noman Mustafa, 2024. "Beyond the business case? Retracing the walk of Corporate social responsibility and financial performance relationship in the Oil and Gas sector," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 2211-2224, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:7:y:2023:i:9:p:1221-1242. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.