Creative Accounting and Investor Value: A Comparative Study of Income Smoothing of Listed Manufacturing Firms in Nigeria and South Africa

Abstract

Given the mixed results of prior studies, this study determined the effect of creative accounting on the investor value of listed manufacturing firms in Nigeria and South Africa from 2012 to 2022. The study investigated the effect of income smoothing on Tobin’s Q of listed manufacturing firms in Nigeria and South Africa. The study obtained data from Thomson One Banker concerning 25 and 44 manufacturing firms listed on the Nigerian Exchange Group and Johannesburg Stock Exchange respectively. The study reveals amongst other things, that income smooth does not significantly affect the investor value of listed manufacturing firms in Nigeria and South Africa. Also, one of the findings indicates that profitability significantly and positively moderated the income smoothing-investor value relationship of listed manufacturing firms in Nigeria and South Africa. The study recommends that firms reconsider their income-smoothing strategy, and factor in profitability in their income-smoothing decision.