Coporate Governance Mechanisms and Accounting Conservatism
Salami Suleiman

The separation of ownership from management and the existence of creditors results in information asymmetry among stakeholders to the firm. Management may pursue interest different from that of other stakeholders; hence, the demand for conservative reporting. This study examines the effects of corporate governance mechanisms on accounting conservatism in the Nigeria food and beverages sector. This study focuses on CEO duality, board size, board composition and managerial shareholding as proxies for corporate governance mechanisms. The negative accrual measure of conservatism was employed in estimating conservatism. Data for the study was obtained from the Nigerian Stock Exchange Fact Book and the companies’ annual report for the period 2003 to 2010. The extent of the influence of our corporate governance proxies was estimated using regression method of analysis. Our result reveals a significant negative influence of board size and a significant positive influence of independent directors on the board on conservative reporting. Therefore, we recommend that boards of listed food and beverages firms should be composed more of independent directors. Also, smaller board sizes should be adopted by Nigeria food and beverages firms in other to improve realization of accounting numbers.

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