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Income Smoothing, Earnings Management and the Credibility of Accounting Information

Grace Oyeyemi OGUNDAJO




Ademola AJAYI


Emmanuel Dare OTITOLAIYE



Grace Oyeyemi OGUNDAJO 1 ,

Taiwo ASAOLU 2
Ademola AJAYI 1 Emmanuel Dare OTITOLAIYE 1 Afolake OGUNFOWORA 1 
  1. Department of Accounting, Babcock University, Nigeria. 1

  2. Department of Management and Accounting, Obafemi Awolowo University. Nigeria. 2

Pages: 292-306

DOI: 10.18488/journal.62.2021.84.292.306

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Article History:

Received: 18 March, 2021
Revised: 20 April, 2021
Accepted: 24 May, 2021
Published: 14 June, 2021


This study investigated the effect of income smoothing and earning management on the credibility of accounting information of listed manufacturing companies in Nigeria. Data used were extracted from the annual reports and accounts of the selected sixteen (16) firms for a period of 10 years (2010-2019) while content analysis was adopted in measuring accounting information credibility. Multiple linear regression analysis (OLS) method was adopted for the analysis. The result revealed that income smoothing and earnings management had statistically insignificant effect on fundamental qualitative characteristics (FQC), while income smoothing and earnings management had statistically significant effect on enhancing qualitative characteristics (EQC). However, the study obtained that income smoothing and earnings management had positive and significant effect on the credibility of accounting information of the listed manufacturing companies in Nigeria. The study opined that managers should ensure that accounting information is credible, possesses desirable accounting information qualities of relevance, and faithful representation, also verifiable, comparable, understandability, and timeliness.
Contribution/ Originality
This study is one of very few studies which have investigated how earnings management practices impacted on objectivity of reported financial information and breach of investors’ trust in the management due to information asymmetry.


Accounting information, Credibility, Earnings management, Enhancing, Fundamental, Income smoothing.


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This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.


The authors would like to express their appreciation to the anonymous reviewers for their time and contributions towards improving this article.

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