42 African J. Accounting, Auditing and Finance, Vol. 7, No. 1, 2020
Copyright © 2020 Inderscience Enterprises Ltd.
Effect of corporate governance on income
persistence and value relevance of quoted
Nigerian firms
Cosmas Ikechukwu Asogwa*,
Grace Nyereugwu Ofoegbu and Uche Modum
Department of Accountancy,
University of Nigeria, Nigeria
Email: cosmasasogwa@gmail.com
Email: grace.ofoegbu@unn.edu.ng
Email: uche.modum@unn.edu.ng
*Corresponding author
Abstract: This paper examined the effect of corporate governance structures
on earnings persistence and value relevance of Nigerian firms. Analysis was
made using multivariate and multiple regression analytic tools with sample of
148 audited financial statements of quoted Nigerian firms in Nigerian Stock
Exchange between 2014 and 2017. We found that CEO duality positively but
insignificantly affected income persistence and positively and significantly
affected value relevance. Board size significantly and negatively affected
earnings value relevance while it negatively and significantly affected earnings
persistence. Audit committee had a significant positive effect on earnings value
relevance and accrual persistence. Thus, audit committee plays a vital
constraining role while board expansion does not necessarily increase earnings
quality. Overall, we can infer that the analyses involving all key earnings
quality proxies could yield a better conclusion. Investors should rely largely on
models that examined various impacts on earnings quality proxies.
Keywords: corporate governance; earnings persistence; earnings predictability;
value relevance; CEO duality; audit committee; board size.
Reference to this paper should be made as follows: Asogwa, C.I.,
Ofoegbu, G.N. and Modum, U. (2020) ‘Effect of corporate governance on
income persistence and value relevance of quoted Nigerian firms’, African J.
Accounting, Auditing and Finance, Vol. 7, No. 1, pp.42–65.
Biographical notes: Cosmas Ikechukwu Asogwa is a Lecturer in the
Department of Accountancy, Renaissance University, Nigeria and has
completed his PhD in Accountancy from University of Nigeria, Nsukka,
Nigeria. He is also a Qualified Associate Chartered Accountant with the
Institute of The Chartered Accountants of Nigeria (ICAN) and has vast industry
experience in private sector. His research interest is in a broad area of corporate
finance, corporate strategies, sustainability accounting, corporate governance
and reporting, earnings management and small business lending. He is a
reviewer of some top ranking journals indexed in Scopus and Clarivate
Analytics.
Grace Nyereugwu Ofoegbu is a Senior Lecturer in the Department of
Accountancy, University of Nigeria and holds a PhD in Accountancy. She is a
Fellow of the Institute of Chartered Accountants of Nigeria (ICAN). Her
research interest includes corporate financial reporting, taxation and corporate
governance.