Research Journal of Finance and Accounting www.iiste.org ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol.5, No.17, 2014 10 Firm Attributes and Earnings Quality of listed Oil and Gas Companies in Nigeria Shehu Usman Hassan PhD Department of Accounting, Ahmadu Bello University, Zaria-Nigeria Shehu.hassanus.usman@gmail.com Musa Adeiza Farouk Department of Accounting, Ahmadu Bello University, Zaria – Nigeria musafarouk@yahoo.com or mscmusafarouk@yahoo.com Abstract This paper is an empirical investigation of firm attributes and earnings quality of listed oil and gas companies in Nigeria for the period of 2007-2011. The listed Oil and Gas firms are Nine (9) in numbers out of which a sample of Seven (7) were used for the study. Firm attributes as the independent variable was proxy with firm size , leverage, Institutional ownership, profitability, liquidity and firm growth), While the residuals from the modified Jones model by Dechow et ‘al (1995) was used to proxy earnings quality. The study adopts multiple panel regression techniques and data were collected from secondary source through the annual reports and accounts of the firms. The findings reveal that leverage, liquidity and firm growth has a significant positive impact on earnings quality while firm size , institutional ownership and profitability have a significant but negative influence on earnings quality of listed oil and gas companies in Nigeria. It is recommended among others that the oil and gas companies may choose to go for more debt especially where the interest rate is considerably low and also increase their liquidity asset and turnover as it has been found empirically to enhance the quality of the firms reported earnings. Keywords: Firm Attributes, Earnings Quality and Oil and Gas Companies 1.1 INTRODUCTION The Global financial crises, corporate failures and scandals around the world and specifically the recent discovery by the Central Bank of Nigeria in the Banking sector has raise a serious questions about the relevance, reliability and effectiveness of the reported accounting earnings. Reported accounting information is said to be relevant to the degree of its capability of influencing a decision maker by helping him/her to form predictions about the outcomes of present event or to confirm or correct prior expectations (Bushman, Chen, Engel and Smith, 2004) as cited in Shehu (2012). While reliability deals with the quality of reported earnings which is said to be free of error, bias and faithfully represent it is actual intended representation. But however, we are left with the question of the possibility of having the annual reports and accounts totally free of bias even if the reports and accounts are totally free of errors. This is humanly impossible because the regulatory inconsistency and the choices available to managers in accounting policies has often call for the exercise of judgments or opinion in preparing the annual reports and accounts which may eventually mislead the public in taken certain decisions with respect to the information made available by the management which is mostly aimed at communicating self-serving information. Therefore for accounting information to be heavily relied upon by the public and to be regarded a quality type; it must be neutral, timely, relevant, accurate, transparent, comparable, predictive, understandable, verifiable and unambiguous in its entirety. There are several reasons that have been attributed to the preparation of misleading financial statements which may ranges from the demand for higher returns by shareholders on their investments, the quest to maintain a giant corporate status in the eye of the business community or sporadic changes in competitiveness, the craze to satisfy the greed of company’s insiders (Shehu, 2012). The consistent failure by Nigerian Corporate Governance culture to be pro-active, active, responsible and accountable to the stakeholders can be attributed to the lackadaisical nature of the regulatory agencies that has left the issue of earnings management under the disguise of business ethics. Firm attributes is said to have significant role in explaining firm level earnings quality. Firm attributes are referred to as those incentive variables that relatively sticky at firms’ level across time. They are variables that affect the firm’s decision both internally and externally (Shehu, 2012). The incentive variable ranges from ownership structures, firm size , leverage, profitability, Liquidity, firm growth among others. In view of the fact that Firm attributes plays an astute role in restraining account information preparers (managers) from maneuvering the accounting figures which will eventually enhance the quality of reported accounting earnings. To this end, there have been inconclusive findings and divergent view in extant literatures as to whether Firm attributes have effect on earnings quality. To the best of our knowledge no research of this nature has been conducted in the Oil and Gas sector, therefore the study seek investigates the influence of Firm