European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.16, No.5, 2024 12 Earnings Quality and Ownership Structure: Moderating Effect of Leverage on Firm Value in Non-Financial Sectors of the NGX Ovbe Simon Akpadaka * Department of Financial Management, College of Private Sector Accounting, ANAN University, Kwall, Plateau State, Nigeria. https://orcid.org/0009-0009-6699-307X * Email address of the corresponding author: simon.akpadaka@gmail.com Abstract This study examines the moderating effects of financial leverage on the relationships among earnings quality, ownership structure, and firm value within the non-financial sectors of the Nigerian Stock Exchange (NGX). Using a sample of 78 purposively selected non-financial firms from the NGX from 2013 to 2022, this study employs moderated linear regression analysis to explore these dynamics. This study aims to fill significant gaps in existing literature by addressing the sectoral effects and interactive impact of financial leverage on the established relationships between earnings quality, ownership structure, and firm value. The findings reveal that earnings quality significantly enhances firm value, thereby affirming the importance of transparent and reliable financial reporting. Institutional ownership is positively correlated with firm value, underscoring its role in effective corporate governance. Conversely, managerial ownership negatively impacts firm value, indicating potential conflicts of interest that detract from shareholder value. Moreover, financial leverage moderates these relationships significantly, with its impact varying by ownership type and earnings quality. The study also identified distinct sectoral effects, indicating that the impact of these variables can differ substantially across different industry sectors. This insight is crucial for policymakers and practitioners aiming to tailor governance structures and financial strategies to enhance firm performance effectively. These results not only contribute to the theoretical literature on corporate finance and governance by integrating agency theory and pecking order theory but also offer practical implications for regulatory bodies such as the Financial Reporting Council of Nigeria (FRCN) and the Securities and Exchange Commission (SEC). By advocating for rigorous disclosure and reporting standards, these findings can help improve corporate accountability and enhance investor confidence in emerging markets like Nigeria. Keywords: Moderating Effect, Ownership Structure, Earnings Quality, Financial Leverage DOI: 10.7176/EJBM/16-5-02 Publication date: June 30th 2024 1. Introduction Earnings quality (EQ) fundamentally represents the accuracy and reliability with which a company’s reported income reflects its true financial performance and its capability to predict future earnings. EQ can also be viewed from the perspective of reported earnings being free from manipulation and earnings that closely approximate cash flow (Dechow et al., 2010; Dichev et al., 2013; Schipper & Vincent, 2003). High-quality earnings provide an enabling environment for stakeholders to evaluate a firm’s financial health and sustainability. Given the critical role of EQ in investment decisions, which ultimately translate into investment returns to shareholders and other stakeholders, it is essential to study how it impacts firm valuation in conjunction with other variables like ownership structure and leverage. Ownership structure refers to the distribution of ownership among shareholders in a firm, which might include the presence of institutional investors and managerial ownership. Ownership structure plays a significant role in influencing firm’s valuation and decision-making processes. Institutional investors, for example, often have a large stake in the company and can influence strategic decisions. Managerial ownership can align the interests of managers with those of shareholders, leading to more effective governance. Leverage, on the other hand, refers to the amount of debt a firm uses to finance its operations. High levels of leverage can increase the risk of financial distress, but they can also magnify returns for shareholders when things are going well. Understanding these variables is crucial for investors and analysts when evaluating a company’s performance and prospects. By considering ownership structure and leverage, stakeholders can better assess the overall health and sustainability of a firm. Leverage, being a two-edged sword, can not only amplify returns when used correctly but also increase the risk of financial distress. As a moderating variable, leverage can produce different outcomes depending on the specific circumstances of the firm. For example, a company with a stable ownership structure and low levels of