Author(s): Joshua Abimbola Abosede, Akintoye R.Ishola
Transparency in the financial report is an important consideration for the investing environment. The study aimed at unravelling the consequence of SR on the earnings management (real activities of earnings management) of the listed manufacturing companies in Nigeria. The population for the study involves all the listed manufacturing companies and using purposive sampling method due to availability of information, Nine (9) manufacturing companies were selected covering the period of 2015-2019 (5 years). Mechanistic approach of content analysis was adopted to analyse the stand-alone sustainability report and the annual report of the companies in other to arrive at their sustainability disclosure index. The study data were analysed with the aid of multiple linear regression analysis of SPSS 21. Empirically, the study revealed that there exist a significant but negative effect of sustainability reporting on the real activities of earnings management at t=-3.371, p-value (0.002)<0.05 meaning that companies that involved in the disclosure of sustainability reporting will have a lower involvement in earnings management grounded in the legitimacy and ethical theory. The study confirmed a significant and negative relationship between the sustainability reporting and earnings management at (r=-0.477, p-value=0.001). The study also indicated a positive and significant relationship between sustainability and return on assets (ROA) at (r=0.359, p – value=0.015< 0.05). Therefore, the study suggested that more regulations should be instituted on sustainability reporting so as to encourage all companies to disclose sustainability in order to enhance good reputation and better performance.