Abstract

The study examines the relationship between accounting ethics and of financial reports qualities of
quoted firms in Nigerian. The study explicitly assesses the impact of accounting ethics and ethical
principles of disclosure on the financial reporting quality of selected firms in Nigerian. Primary data
was used in the study. The results showed that accounting ethical principles of disclosure
significantly influence the quality of financial reports of selected organizations. The study suggests
amongst others that, accountants should totally adhere to ethical principles while carrying out their
responsibilities in order to generate quality, authentic, reliable and dependable financial reports.

Key Words: Accounting Ethics, Quality of Financial Reporting

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 CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The definition of ‘ethics’ has been given by different scholars in literature.

Fisher and Lovell (2003) views ethics as the branch of philosophy that concentrates on
formal academic reasoning about what is right and what is wrong. Hornby (2010)
defines ethics as those moral principles that governs the behaviors of human. The
similarity in both definitions is the yardstick of measuring morally acceptable
behavior. Babayanju, etal, (2017) differentiated between value and ethics, while the
formal are beliefs about what is right and wrong that guides the daily activities of
humanity, the latter provides tenets and standards, which are obtained from the
theories of ethics, for thinking about the issue. The concept of ethics is
interdisciplinary. Virtually every profession has some ethical principles governing its
operations. In the accounting world, there are accounting ethics; in the business
environment, there are business ethics, in the medical line, there are medical ethics, in
engineering, there are engineering ethics, in the legal world, there are legal ethics and
the like. The usefulness of ethics in each of these professions is to create a template
for acceptable professional behavior that will guide members in the aspect of
performing and discharging their duties to their clients in particular and public in
general.

As a result of lack of authenticity in the financial information prepared by

accountants exerted pressure on the Congress of United States to promulgate the
Sarbanes-Oxley (SOX) Act in 2002 (Enofe, etal, 2015). These act encapsulated the
establishment of Public Accounting Oversight Board, to ensure that accountants are
well-grounded in ethics education in order for them to able to make reasonable ethical
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decisions when faced with unpleasant choices. The pervasiveness of corruption in the
private and public sector coupled with high rate of fraudulent practices have propelled
accounting practitioners to comply thoroughly with codes of professional conducts.
To buttress this, Ogbonna and Appah (2011) maintained that corrupt activities in the
business world have gained roots, it is therefore imperative for accountants, who are
saddled with the responsibility of preparing financial reports, to comply totally with
codes of ethical accounting standards to produce accurate, timely, effective,
comprehensive, relevant and authentic financial reports.

Financial reporting is the fulcrum of the art of decision making. Various

stakeholders of an organization need financial report in order to assess the
performance, profitability, viability and progress of such organization. The financial
reports prepared by the accountants are expected to meet the criteria of a good
financial report, in order to ensure that ‘all and sundry’ comprehend the report content
(Gois, 2014). To this end, an accountant is liable to the outcomes of his moral choices
both for his one life and the lives of other individuals. Catacutan (2006) posits that an
accountant who is involved in fraudulent activities destroys his moral being,
reputation and endangers the interests of other stakeholders dependent on him.

The essence of preparing and publishing financial reports is to provide stakeholders

(such as shareholders, debenture-holders, board, staff, investors, capital provides and
the general public) with the necessary information for assessing the performance of an
organization. Providing quality financial reports is desirable because it allows
stakeholders to make investment, finance, dividends and resource allocation decisions
that will enhance the corporate performance of a firm. The quality of financial
reporting shows the extent to which the financial reports of a firm are presented with
every iota of honesty.

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 The obligations of an accountants goes beyond his immediate clients but also
to shareholders, debenture-holders, creditors, employees, suppliers, government,
accounting profession and the public at large (Appah, 2010; Abiola, 2012). There is
need for accountants to behave ethically based on the stipulated codes of accounting
conducts. Professional ethics is pertinent to accountants and those who rely on the
information provided by the accountants because ethical behaviors involves taking the
moral point of view (Klai & Omri, 2011; Enofe, etal, 2015). The development and
enforcement of professional ethics in the accounting world will most likely result to
enhancing the quality of financial reporting.

1.2 Statement of Problem

Accountants from time to time are confronted with ethical dilemmas.

Accountants in the course of their operations, encounter situations where they are
enticed to choose between right and wrong. The accountants’ claim to professionalism
is premised on their compliance with ethical principles and the will that they would
not allow their responsibilities to public interests to mix with personal interests
(Babajanyu, etal, 2017).

Every profession has its stipulated ethical standards governing members’

behaviors. The reason for this, as espouse by Ogbonna and Appah (2011), is because
of the incessant occurrences of corporate scandals in the Nigerian business
environment. Lack of ethical considerations can deter an organization to achieve its
goals and objectives. Joseph and Dike (2014) corroborates that failures of some
organizations in the corporate scene is traceable to the inability of accountants of such
organizations to comply with codes of conduct premised in the content of financial
reports and their skepticism by end users. The cases of business failures and scandals
have led to greater scrutiny of financial reports provided by accountants.

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 The code of corporate governance (2011) mandated that every registered
organization in Nigeria must have an ethical committee. The ethical committee is
faced with the task of deliberating on ethical matters and also promoting ethical
principles in an organization. The composition of ethical committees has not produced
desirable results as some of the corporate scandals committed over time are linked to
ethical matters (Ezeani, etal, 2012; Festus & Temitope, 2016). Few cases of corporate
scandals that have occurred in the past decade include Enron Plc manipulation of its
financial statements because of lack of autonomy from senior executives; Cadbury Plc
overstatement of its audited financial reports; African petroleum excluded its debt
burden of N22 billion in its financial reports and banks conspiracy with external
auditors to commit fraud (Enofe, etal, 2015). A proper assessment of the
aforementioned scandals reveals that their occurrences are outcomes of non-
compliance to ethical tenets. It is therefore necessary to evaluate ethical issues in the
accounting profession and how they affect the quality of financial reports.

1.3 Objectives of the Study

The main objective of this study is to examine the impact of accounting ethics
on the financial reporting quality of quoted firm in Nigeria. However, the specific
objectives are to:

1. Examine the effect of disclosure on the quality of financial reporting of quoted

firms in Nigeria.
2. Investigate the effect of ethics on the quality of financial reporting of quoted
firms in Nigeria

1.4 Research Questions

1. Is there any significant relationship between disclosures on the quality of

financial reporting of quoted firms in Nigeria?
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 2. Do ethics have effect on financial reporting of quoted firms in Nigeria?

1.5 Research Hypotheses

In order to achieve the objectives of this study the following null and alternate
hypothesis were formulated;

Ho: There is no significant relationship between disclosures as an accounting ethical

principle on the quality of financial reporting of quoted firms in Nigeria.

Hi: There is significant relationship between disclosures as an accounting ethical

principle on the quality of financial reporting of quoted firms in Nigeria.

Ho: There is no relationship between ethics and the financial reporting quality of
quoted firms in Nigeria.
Hi: There is a relationship between ethics and the financial reporting quality of quoted
firms in Nigeria.

1.6 Significance of the Study

This study will be of immense benefits in multiple ways. Firstly, it will inform
stakeholders of various organizations on how to uphold their stipulated ethical
principles in order to avoid cases of business failures and corporate scandals.
Secondly, it will propel accountants to adhere strictly to codes of accounting ethics in
order to have some elements of reliability in the financial reports prepared and
provided by them. Thirdly, the study via its findings will assist stakeholders of
organizations to make vital investment, finance and dividend decisions in order to
promote the overall corporate performance of their organization. Fourthly, it will
instill the spirit of professionalism, truthfulness, honesty and integrity amongst

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accountants as they will realize that involvement in fraudulent practices tarnishes their
personal reputation, professional reputation and as well hamper on the genuineness of
financial information released by them. Lastly, this study will act as a guide for
students, researchers and academics that might be willing to undertake further studies
on the subject matter.

1.7 Scope of the Study

This study will focus on accounting ethics and financial reporting quality of
quoted firms in Nigeria., Since it will be totally impossible to study the entire Nigeria
and coupled with the fact that social science research depend largely on sample or a
given population or situation as representing the area, it is measured strictly in terms
of typical characteristics of the entire population.

Oguonu and Anugwom (2006:p.22) stipulates that research is a system a

researcher use in arriving at decision regarding the study scope, instrument and size.
Therefore, the scope of this study was very limited. The work could not go into the
entire Nigeria which may be too vast but rather restrict the study to Ibadan Oyo state,
using the result to represent the whole country.

1.8 Definitions of Key Terms

Ethics

This refers to a set of moral principles, especially ones relating or to or affirming a

specified group, field or form of conduct.

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Accounting Ethics

This is primarily a field of applied ethics and is part of business ethics and human
ethics. Accounting ethics studies moral values and judgments as they apply to
accountancy.

Financial Report

Financial report (or statements) is a formal record of the financial activities and
position of a business, person or other entity. Relevant financial reports such as
balance sheet, income and expenditure statement, statement of retained earnings and
cash flow statements, must be presented in a structured manner which must be easily
comprehensible to the end users.

Objectivity

Objectivity entails that financial report must be independent and supported with
unbiased evidence.

Disclosure

Disclosure refers to the additional information attached to an organization’s financial

report, usually as explanation for activities which have significantly influenced such
organization’s financial results.

Integrity

Integrity implies that financial report must be accurate, reliable and truthful.

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Professional Independence

This refers to freedom of professional accountants from control or influence of

another party or stakeholder. It implies that professional accountants must be given
the free-hand to prepare financial reports devoid of internal and external interference

Competence

This refers to the quality of being adequately qualified to handle assigned tasks and
responsibilities.

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 CHAPTER TWO
LITERATURE REVIEW

2.0 Introduction
This Chapter contains the work of other researchers relating to financial
reporting. It comprises the conceptual Review, Theoretical Review and Empirical
Review. The conceptual Review defines concepts like Ethics and financial reporting.
It emphasized that Financial Reporting involve the communication of related financial
information to the different stakeholders. While the theoretical review section mention
theories like stewardship theory, Voluntary disclosure theory, ethical relativism theory
and resource dependence theory. Finally, the empirical theory section of the literature
review contains the findings relating to financial reporting.

2.2 Conceptual Review

2.1.1 Concept of Ethics
According to Ogbonna and Appah (2011), Ethics are the moral principles that
an individual uses in governing his or her behaviour. It is the personal criteria by
which an individual distinguishes right or wrong”. In Ogbonna’s view, when we talk
about ethics and ethical values, we mean our concern about things, which we think,
say and/or practice that may not necessarily violate the rules of the organization or
infringe the law of the land or amount to outright crime or felony, but which borders
on our sense of morality, our sense of right and wrong. It concern itself with issues
like conflict of interest, insider’s dealings, compromising integrity, objectivity,
independence, confidentiality, disclosure of official secrets and destruction of official
documents for financial benefits and other similar acts that are against moral
principles and ethical standards. Nwagboso (2008) argues that ethics or morality as
matters of good and evil, right and wrong and subscribes to the fact that “we are living
today in an ethical wilderness”. He believes that ethics is in ferment and chaos among
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all people. Hayes. Schilder, Dassen and Wallage (2010) argue that ethics represent a
set of moral principles, rules of conduct or values. Ethics apply when an individual
has to make a decision from various alternative regarding moral principles. Ethical
behaviour is necessary for society to function in an orderly manner. The need for
ethics in society is sufficiently important that integrity, loyalty, and pursuit of
excellence cannot be incorporated into law. They further stated that the following
ethical principles incorporate the characteristics most people associate with ethical
behaviour; honesty, integrity, promise keeping, loyalty, fairness, caring for others,
respect for others, pursuit of excellence and accountability. Ajibolade (2008) divided
the field of ethics into Meta ethics, ethical theories and applied ethics. Meta ethics is
the reflection upon ethics concepts and theories. Ethical theories is the substantive
proposals regarding those consideration that would determine morally acceptable
conduct and applied ethics is the deliberation related to a specific field of enquiry.
Examples include ethics in business, public service and general professional ethics.
Mathews and Perera (1996) states that a formal code of ethics ensures that
professional members will be more aware of the moral aspects of their work; an
accessible reference tool for managers to keep ethical concerns in mind; abstract ideas
will be translated into concrete terms applicable to every situation; members as a
whole will act in a more standardized fashion throughout the profession. According to
Jenfa (2000) and Nwagboso (2008), professional ethics provides accountants with
certain advantages such as determining the professional posture he should adopt if he
is to succeed and determining the prosperity of his conduct in his professional
relationship.
2.1.2 Ethics in Accounting:
Ethics in accounting is mainly known as applied ethics, which strongly
emphasizes human and business ethics, judgments, moral values, and their application

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in accountancy. Generally, the major ethical drivers of accounting are an appropriate
practice and a good standard of professionalism.
According to Micewski and Troy (2006), the ethical responsibility within the
business world is not holistic, but lies under the particular context of ethical behavior.
A majority of the corporations in the world have instituted ethical issues in the
accounting processes, which increases the potential for conflict of interest. Breach of
ethical rules within the corporate finance practice, through financial misstatements,
usually damages an organization’s reputation, customer satisfaction levels, and the
trust of investors on the company.
According to Johannes Brinkman (2002), ethics is the discipline that exhibits
the matters related to evil and good, wrong and right, and vice and virtue. Therefore,
ethics are used to examine moral principles, human behavior, and their efforts to
distinguish between good and bad. The development of ethical codes within
organizations can secure the fidelity of business transactions and financial processes,
which in turn, affect employee performance, relationship, and credibility of the
company.
The role of accountants in regards to the timely and accurate preparation of
financial reports is of significant importance to decision-making by investors,
managers, and other senior management officials. Adherence to ethics in accounting
also aids in ensuring compliance of internal control systems with standards. Therefore,
accountants can identify and measure resource wastage, investigate, and perform roles
that can contribute to the improvement of policy formation and fraud identification in
an organization (Elias, 2002). Unethical behaviors not only degrade the reputation and
credibility of an individual, but the company as well, increasing the likelihood of
criminal activities that could result in the decrease in profit levels (Sims, 2003).

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2.1.3 Importance of Accounting Ethics
Ethics is paramount to accounting profession because it help and guides the
accountant to be morally outstanding when carrying out his/her duties. We should see
ethics as the biblical “light of the world” any accountant who lacks ethics has lost
his/her “light”. Hence, the groups of people who use financial statement or accounting
information expect that the accountants should be highly reliable, trustworthy,
objective, competent, and ethically sound in the discharge of their
responsibilities/duties especially as it concerns the preparation of the financial
statement. They expect that the accountant should exercise due professional care, and
a genuine interest in serving their clients and the public. In all their dealings, they are
expected to provide quality services, enter into contract arrangements with due
process and display at all times high level of professionalism which is consistent with
the principles of professional code of conduct. The society and investors places a high
degree of confidence and expectations on the professional accountants because of the
impact of their activities to all stakeholders. Therefore, auditors and accountants are
expected to uphold professional ethical standards and codes of practice when carrying
out their duties and responsibilities with respect to the financial position of the
firm/company‟s in with they have contract with, because of the various stakeholders
that are involves.
2.1.4 Fundamental Principles of Ethical Standards
Mathews and Perera said to maintain social control; a profession has to devised
rules to govern its members. Generally, these rules are encoded in a code of ethics
which is a guide to members of a professional community in performing their
professional roles. Jenfa, Hayes et al, ICAN provides fundamental principles and
guidelines for professional accountants. These principles include integrity, objectivity,
professional competence and due care, confidentiality, professional behaviour,
technical standards and independence.

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a) Integrity: A professional accountant should be straight forward and honest in
all professional and business relationships. Jenfa says a professional accountant
have a responsibility to avoid actual or apparent conflict of interest. The
professionals should be able to refrain from engaging in any activity that would
prejudice their ability to carry out their duties ethically. According to Osisioma,
integrity is the ultimate test of professionalism; it is the state of being complete,
unified. When I have integrity my words and my deeds match up. I am who I
am, no matter where I am or whom I am with. He further notes that integrity is
antithetical to the spirit of our age. The overarching philosophy of life that
guides our culture revolves around a materialistic consumer mentality. Maxwell
(1993) in Nwagboso opines that integrity is not a given factor in everyone‟s
life. It is a result of self-discipline, inner trust and a decision to be relentlessly
honest in all situations in our life. Unfortunately in today‟s world, strength of
character is a rare commodity. As a result, we have few contemporary models
of integrity. Our culture has produced few enduring heroes, few models of
virtue. We have become a nation of imitators but there are few leaders worth
imitating. A professional accountant should not be associated with reports,
returns, communications or other information where they believe that the
information contains materially false or misleading statements.
b) Objectivity and independence: The principle of objectivity imposes on all
professional accountants to be fair, honest and free from conflict of interest and
should not allow biasness or undue influence of others to override their
professional or business judgment of the mind often desorbed as independence.
Jenfa argues that professional accountant have the responsibility to
communicate information fairly and objectively and disclose fully all relevant
information that could reasonably be expected to influence an intended user‟s
understanding of the reports, comment and recommendations presented. The

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 IFAC code of ethics [13] for professional accountants recognizes that the
objectives of accountancy professional are to work to the highest standards of
professionalism, to attain the highest levels of performance and generally to
meet the public interest requirement.
c) Professional competence and due care: A professional accountant has a
continuing duty to maintain professional knowledge and skill at the level
required to ensure that client or employer receives competent professional
services based on current developments in practice, legislation and techniques.
Competent professional services require the exercise of sound judgment in
applying professional knowledge and skill in the performance of such services.
Professional competence may be divided into two separate phases of
Attainment of professional competence, and Maintenance of professional
competence. The maintenance of professional competence requires a continuing
awareness and an understanding of relevant technical professional and business
developments. Continuing professional developments develops and maintains
the capabilities that enable a professional accountant to perform competently
within the professional environment. A professional accountant should act
diligently and in accordance with applicable technical and professional
standards when providing professional services. Diligent encompasses the
responsibility to act in accordance with the requirements of an assignment,
carefully, thoroughly and on a timely basis. An accountant should ensure that
those working under the professional accountant authority in a professional
capacity have appropriate training and supervisions. An accountant should also
refrain from agreeing to perform professional services which they are not
competent to carryout, unless competent advice and assistance are obtained
where appropriate, a professional accountant should make clients, employers or
other users of the professional services aware of limitations inherent in the

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 services to avoid the misinterpretations of an expression of opinion as an
assertion of fact.
d) Confidentiality: The principle of confidentiality imposes an obligation on the
professional accountants to refrain from disclosing the client confidential
information acquired as a result of professional or business relationships
without proper and specific authority or unless there is a legal or professional
right or duty to disclose, and also refraining for using confidential information
acquired as a result of professional duty and business relation to their personal
advantage or the advantage of third parties. A professional Accountant should
maintain confidentiality even in a social environment. The professional
accountant should be alert to the possibility of inadvertent disclosure,
particularly in circumstances involving long association with a business
associate and a close or immediate family member. A professional accountant
should maintain confidentiality of information disclosed by a prospective client
or employer, should also consider the need to maintain confidentiality of
information within the firm or employer organization. It is his responsibility to
take reasonable steps to ensure that staff under his control and persons from
whom advice and assistance is obtained respect the professional accountant‟s
duty of confidentiality. The need to comply with the principle of confidentiality
continues even after the end of relationship between a professional accountant
and a client or employer. When a professional accountant changes employment
or acquire a new client, the professional accountant is entitled to use prior
experience. The professional accountant should not however, use or disclose
any confidential information either acquired or received as a result of a
professional or business relationship. However, the following are circumstances
where professional accountant are or may be required to disclosure confidential
information or when such disclosure may be appropriate. And these are: when

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 disclosure is permitted by law and is authorized by the client or the employer;
when disclosure is required by law e.g. production of document or other
provision of evidence in course of legal proceedings or, disclosure to the
appropriate public authorities of infringements of the law that come to light and,
were there is a professional duty or right to disclose.
2.1.5 Concept of Financial Reporting
Financial reporting involves recording financial information according to
relevant accounting standards. According to (Vargiya, 2015), Financial Reporting
includes the exposure of related financial information to the different Stakeholders
about anorganisation over a predefined timeframe. These Stakeholders includes:
1. Investors.
2. Lenders
3. Suppliers and government organizations.
Financial Reporting is considered as the final result of Accounting. It comprises of
various important statement which include - financial related explanations
fromStatement of financial position, Statement of comprehensive income, Statement
of cash flow, Statement of changes in equity, notes to financial related explanations,
Quarterly and Annual reports (if there should be an occurrence of quoted
organizations),Prospectus (if there should be an occurrence of organizations going for
Initial Public Offers) and Management Discussion and Analysis (if there should be an
occurrence of open organizations).
2.1.6 Accounting Ethics and Financial Reporting
The need and importance of ethical behavior in financial reporting cannot be
over-emphasized. Financial reports are the documents and records company put
together to track and review how much money their business is making (or not). The
purpose of financial reporting is to deliver company financial position/information to
the shareholders, potential investor, lenders/creditors and other stakeholders of the

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business. Financial reporting is the way by which managers give account of their
stewardship to their owners and stakeholders in clear terms and language. It explains
how resources are acquired, utilized to generate revenue i.e. utilization of assets of the
company to generate wealth for all stakeholders. According to Adebayo [7],
“financial reporting is the only way by which managers of organizations give account
of their stewardship to their owners and other stakeholders”. He further said that,
financial reporting shall disclose in clear terms and languages what resources are
acquired and available, how they are utilized and achieved results from such
utilization. Financial reporting can also be seen as the process of communication of
financial information, and it is a key source of information for managers and other
stakeholders who need to make informed choices based on their limited resources in
their disposal. Financial reports should possess a high degree of accuracy,
completeness, and be concise. It is the duty of the accountant to honestly give a true
and fair view of the financial position and performance of a company. Financial
reporting is designed to meet the needs of users by providing information that is
relevant to making rational investment, creditable, and informed decisions. If the
reports of companiesare cooked, then their usefulness is defeated because stakeholders
will no longer have trust in the directors, Managers, and the financial statements of
company. This will have a ripple effect on the economy, because investors won‟t be
investing. This will in turn create a feeling of indecision by some of the stakeholders
as to whether to buy or sell their shares/stock. To avoid this skepticism by all
stakeholders, organizations such as Security and Exchange Commission (SEC),
Institute of Chartered Accountants of Nigeria (ICAN), Association of Certified
Chartered Accountants (ACCA), and other regulatory bodies have put in place
effective accounting standards and ethics that are held to a higher degree and that will
serve in the preparation of better financial statement with complete information that
will support all stakeholders decision making.

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2.1.7 Concept of Reliability of Financial Reporting.
The expression "reliable quality" in connection to financialcommunication is a
vital subjective property of accountinginformation. This term is imperative and may
impact whether the information is helpful to the individuals who read financial related
explanation or something else. The reliable quality of inspected corporate yearly
financial report is thought to be vital and a fundamental element influencing the
convenience of information made accessible to different users. The
accountingresearches have perceived that the dependability of reports is a critical
normal for financialaccountinginformation and for administrative and expert offices.
Reliable quality idea is a nature of information that guarantees the management that
the informationcontained in the financial related records catches the genuine
conditions and occasions of the communication substance. The FASB was the main
standard setter to characterize the term dependability. As far as the FASB Concepts
Statement No. 2 (FASB, 1980) the dependability of a measure lays on the loyalty with
which it speaks to what it implies to present (portrayal dedication), combined with an
affirmation for the client, which comes through confirmation, that it has that
representational quality (undeniable nature). In Contrast, the IASB Framework
expresses that information has the nature of dependability when it is free from
material blunder and inclination and can be relied on by customers to speak to reliably
which it either indicates to speak to or could sensibly be required to speak to. In the
IASB Framework five qualities are included under the idea of dependability: loyal
portrayal, substance over form, nonpartisanship. The attributes of reliable quality are:
i. True and reasonable: Reliable information implies that the financial
proclamations are an impression of the organization's financial reality. At the
end of the day, are there a genuine and reasonable introduction of the
organization's working outcomes and its financial condition? However, what is
"genuine and reasonable"? In an IFRS setting, "genuine" implies that the

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 information is objective and spoke to in an unprejudiced way and "reasonable"
implies that sound judgment wins in light of the fact that IFRS supports
utilizing financial saving advantage parameters to adjust the premiums of the
perusers with the cost of planning IFRSfinancial exposures.
ii. Free of material blunder: all together for information to be solid, it must be
free of material mistakes. Material things are those that can possibly change the
feeling of the users of the financial proclamations. Material information must
not be withheld from loan specialists and lenders. On the off chance that there is
any uncertainty about whether a thing is material or not, the information ought
to be given to the users of the financial explanations. Full exposure is
dependably the shrewd decision.
iii. Neutral: Reliable information should likewise be impartial. It must be free
from inclination. In spite of the fact that it is unimaginable in view of human
instinct to totally wipe out every single inclination, bookkeeper should
consistently attempt to be autonomous. The notes to the financial articulations
ought to be painstakingly composed in a way that passes on the actualities
without communicating any individual perspectives.
iv. Completeness: Reliable information should likewise be finished. One of the
objectives of International Financial Reporting Standards (IFRS) is to rouse
certainty that all correlated information is included.
v. Substanceoverform: Decisions about whether information about individual
transactions ought to be accounted for must be founded on the expectation of
displaying a genuine and reasonable photo of the organisation's outcomes and
financial condition. IFRS is evident that mirroring the organisation's financial
reality in its financial related articulations involves substance over shape.
vi. Prudence: International Financial Reporting Standards (IFRS) requires that
bookkeepers who plan financial related articulations must exercise judgment in

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 managing the inescapable instabilities of valuation and materiality. They are
relied upon to utilize a level of alert in making these judgments. Accounting
experts must be judicious in their approach by considering every one of the
realities and information, both target and subjective, to deliver financial
articulations that meet the reliable quality prerequisite of

2.1.8 Goals and Objectives of Financial Reporting

According to International Accounting Standard Board (IASB), the goal of
financial related reporting is "to give information about the financial position,
performance and changes in financial position of an undertaking that is helpful to an
extensive variety of users of accounting information.
The reasons for financial reporting involves, providing information to management of
an organization which is utilized with the end goal of planning, examination,
benchmarking and basic leadership, making information available to investors,
promoters, obligation supplier and leasers which is utilized to empower them to male
sane and reasonable choices with respect to business, credit and so forth,
communicatinginformation to shareholders about the nature of activities in an
organization, Providing information about the financial assets of an organisation,
events to those assets (liabilities and proprietor's value) and how these assets and
events have experienced change over a timeframe, Providing information with respect
to how an organisation is securing and utilizing different assets. Providing information
to different Stakeholders with respect to performance of management of an
organization in the matter of how tirelessly and morally they are releasing their
fiduciary obligations and duties.It includes providing information to the statutory
reviewers which thus encourage review. It also enhances social welfare by
investigating the enthusiasm of workers, exchange union and Government.

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2.1.9 Importance of Financial Reporting
As indicated by (Vargiya, 2015) the significance of financial related reporting
cannot be over emphasized. It is required by every last partner for numerous reasons
and purposes. The following focuses highlights why financialcommunication system
is essential, because itcauses an organisation to conform to different statues and
administrative necessities. The organisations are required to submit financial related
proclamations to Government Agencies. In the event of quoted organisations,
quarterly and also yearly outcomes are required to be documented to stock trades and
distributed, encourages statutory review - the Statutory reviewers are often required to
review the financial proclamations of an organisation to express their assessment.
Financial reports also shape financialplanning, examination, and basic
leadership.Financial reportingalso helps organisations to raise capital both locally and
also abroad. On the premise of financials, general society at large can affect the
performance of the organisation and of its management if information about them is
not contained in the financial statement.
2.1.10 The Nature and Scope of Financial Reporting
Financial related answering as indicated by Nzotta (2008) is a basic issue which
influences the basic leadership procedure of different people, corporate bodies,
investors and producers. Glautier and Underdown (2001) says the essential target of
financial related reporting is to convey information about the assets held and
communication of valuable information to those who need them.Nzotta (2008)
expressed that financial related reports help the customers in assessing over a
significant time span, the performance of the organisation and its capacity to augment
the abundance of the shareholders. Moreover, it evaluates the capacity of the firm to
make value and target appraisal of the value made every minutes.
Financial reports highlight financial related information which gives experiences into
assets held by an organisation, the nature of these assets including the commitment of

21
the firm to exchange assets of different proprietors and the impacts of transactions,
occasions and conditions that change its assets and events to these assets (Glautier and
Underdown 2001). Belkaoui (2002) noticed that characteristics of financial related
reports include importance, understandability, reliability,completeness, objectivity,
convenience and likeness. Best, (2009) as reported by Adediran,Alade,Oshode,(2013)
opined that the essential subjective qualities (that is, Relevance and reliability) are
most critical and decide the setting of financial related communicationinformation.
The enhancing qualitative characteristics, for example, understandability, similarity,
unquestionable status, and auspiciousness can enhance choice value when the
subjective qualities are set up. To survey the nature of financial related reporting,
different estimation techniques have been utilized. Some of these qualities include
Relevance: As a nature of financial report is alluded to as the ability of having any
kind of effect in the choices made by customers in their ability as capital suppliers
IASB (2008). Numerous analysts have operationalized prescient incentive as the
capacity of past income to foresee future profit (Schipper and Vincent, 2004).
Corroborative estimation of the importance of financialreportinginformation on the off
chance that it affirms or changes past or introduces desires in light of past assessments
(IASB, 2008). Financial report have a quality of Faithful Representation which
implies that it must Faithfully portrayal accounting information in the financial
statement and this is the second key quantitative trademark in the standard. To
dependably speak to financial wonder, that information must be finished, impartial,
and free from material blunder. Reliable portrayal is measured utilizing five things of
lack of bias, fulfillment, flexibility from material blunder, and unquestionable status
(Maines and Wahiens, 2006). It must also be understandable which is referred to as
Understandability, as indicated by IASB (2008), understandability is the point at
which the nature of information empowers customers to appreciate their significance.

22
 Courtis (2005) contends that understandability is measured utilizing
straightforwardness and cleanness of the information in yearly reports. Financial
report must also be Comparable, this is normal for financial related reports clarifies
the nature of information that empowers customers to distinguish similitudes and
contrasts between two arrangements of financial marvels (Schipper and Vincent
(2004). Finally the report must be Timely also seen as Timeliness, This is also normal
for financial related report and it implies having information accessible to executives
before it loses its capacity to impact choices IASB (2008). It alludes to the time it
takes to uncover the information.

2.2 THEORETICAL FRAMEWORK

2.2.1 Stewardship Theory
According to many scholars the popular agency theory is known to have
evolved from Economics while the Stewardship theory can also be said to have
developed from psychology and sociology. The Stewardship theory can also be said to
be a product of the seminar work done by Donaldson and Davis (1989), this seminar
work emphasized that the senior executive should act as steward of the organisation
and that everything is done in the best interest of the principal. This explanation of
stewardship theory put forward by Donaldson and Davis (1989) established that most
managers tend to act in the best interest of their firm, by emphasising the collective
goal of the organisation instead of their self-serving option. Their finding further
suggests that most stewards are motivated only by making the right decision which is
usually in the best interest of the organisation, because of the strong assumption that
stewards will also benefit from the right decision taken in the long run. Similarly,
Davis, Schoorman and Donaldson (1997) define stewardship theory as the process
where stewards protect and maximize shareholders wealth through improved firm’s
performance, because by doing so, the stewards recognised, that his utility function is

23
maximized. This stewardship theory refers more to the manager and chief executive as
the main individual responsible for the stewardship function in the organisation. In
another, definition, Block (1996) reported that the stewardship role is depicted with
service to the firm over self-interest; he further established that organisation and
individual role can be easily achieved by honoring the stewardship relationship and
treating followers like owners and partners.
2.2.2 Voluntary Disclosure Theory
The thought of theory of Voluntary Disclosure emphasizes that, even without
control, managers still wish to reveal extra information. This is because in the light of
contemplations found in organisation theory, which affirm that agency expenses are
borne for the most part by agent (Jensen and Meckling, 1976). Along these lines,
operators attempt to diminish their agency expenses to augment their riches. As
depicted in organization theory, agent expenses are a result 41 of information
asymmetry, whereby the specialist has more private information about the
organisation’sperformance than the essential. Hypothetical and exact reviews in
accounting center on the educational part of willful revelations for the capital markets.
(e.g. Healy and Palepu, 2001; Verrecchia,2001). The SEC and the FASB give rules to
obligatory revelations; the exposure writing in accounting alludes to deliberate and
optional disclosures, conversely, as informationmanagement discharges itself. The
hidden supposition in the disclosure writing is the administrator has better information
than others. The outcome is executives' exchange off between settling on accounting
decisions and giving revelations to "convey their better information of an
organisation’sperformance than financial specialists, and to oversee announced
performance for contracting, political, or corporate management reasons" (Healy and
Palepu, 2001).
Hypothetical reviews identified with Disclosure propose full revelation of
information will happen because of financial specialists' conviction non-unveiling

24
firms have the most exceedingly bad conceivable information(Grossman, 1981). Such
reviews likewise accept sound exposures and zero Disclosure costs. In any case,
Verrecchia (1983) proposes, within the sight of settled, positive Disclosure costs, just
firms whose information gives financialreturns better than expenses will uncover.
Likewise, revelation approaches are impacted when Disclosures give information to
contenders (Verrecchia, 1983). Hypothetical reviews in accounting identified with
revelation are most worried about what sorts of exposures may happen.
2.2.3 Ethical Relativism Theory
This theory was developed by Velasques, Andre, Sharks and Meyer (2004) at
Santa Clara University, Silicon Valley which holds that moral quality should be the
standards of one's way of life. That is whether an activity is correct or wrong relies
upon the ethical standards of the general public in which it is practiced. A similar
activity might be ethically appropriate in one society yet be ethically wrong in
another. For the moral relativist, there are no general good norms that can be all
around connected to all people groups under all circumstances. The main good gauges
against which a general public's practice can be judged are its own. In the event that
moral relativism is right, there can be no regular structure for settling moral question
or for achieving concession to moral matters among individuals from various social
orders. Moral relativism advises us that diverse social orders have distinctive good
convictions and that our convictions are profoundly affected by culture. It additionally
urges us to investigate the reasons hidden convictions that contrast from our own,
while testing us to look at our purposes behind the convictions and qualities we hold.
This consequently holds the way that Nigerian saving financial industry has a culture
that necessity to assimilate morals that are with respect to the Nigerian managing an
account culture, which will deliver feasible performance that will guarantee financial
strength and resolve financial misery.

25
2.2.4 Resource Dependence Theory
Asset reliance theory created by Pfeffer and Salancik in 1978 emphasized that
the board and specifically the constitution of the non-official component of a board
can furnish the firm with a key arrangement of assets. This epitomizesthe board as a
wellspring of assets for an organisation to open up an altogether different path and, to
consider the board's contribution in bringing expertise to the company. Assets can take
an assortment of structures each of which can be contended to add to the capital of an
organisation. Non-official executives can be a wellspring of mastery which managers
can draw upon, both as particular abilities and also exhortation and advice in
connection with technique and its performance. They can likewise fill in as vital
wellspring of contacts, information and connections that enable officials to better deal
with a portion of the instabilities in nature.
Asset reliance theory enables us to think about the altogether different
requirements that organisations have at various phases of their life-cycle. This theory
is associated with this review in pulling assets together to furnish great corporate
management with sound moral values in an unhistorical working condition like
Nigerian keeping financial industry. The significant review holes are that a large
portion of the reviews just thought to be one of the instruments of either moral
qualities or corporate management, while this review see the mix of the two in giving
quality and dependable financial reports; likewise this review proceeds to interface the
effect of International Financial Reporting Standard and notwithstanding associating it
with two imperative investments that will offer reality to the usage of the suggestions.

26
2.3 Empirical Framework
2.3.1 Accounting Ethic and Financial Reporting Quality
Studies in Developed countries.
Popova et al. (2013) investigated the relationship between mandatory
disclosure and financial reporting quality using a sample of UK companies
included in FTSE 350 index. The findings showed that the average mandatory
disclosure index for the 5 year period is 91.51% (withminimum 69.31% and
maximum 100%) which is consistent with disclosure index by Omar et al.(2011) in
conformity with the financial reporting quality. Ali (2014) examines the relation
between corporate governance and financial reporting quality disclosure in a
context of principal-principal conflicts and poor investor protection. The result
showed that there is a positive relationship between corporate governance and
disclosure of financial reporting quality but no relationship between financial
reporting quality disclosures and cross listing. Hassan (2012) examined the extent
of corporate governance and f inancial reporting quailty by United Arab Emirates
(UAE) listed corporation s.
The result revealed that the highest financial reporting disclosures are those dealing
with management structure and transparency which are also found to be significantly
different across the sectors in the UAE.
Studies from Developing Nations
Mahdi and Mohsen (2011) carried out a study on the impact of professional
ethics on financial reporting quality in Iran they employed a 24 item questionnaire and
worked with a sample of 205 Iranian companies. The result of their findings showed
that professional ethics have a significant impact on the quality of financial reporting.
Masoud and Mahbude (2013) investigated the impact of professional ethics on
financial reporting quality and found that developing professional ethics in accounting
will help promote financial reporting quality. Tae and Jinhan (2011) examined the

27
effect of business ethics on financial reporting quality using Korea firms. They found
out that companies with a higher level of eth ical commitment are engaged in less
earnings management, report earnings more conservatively, and predict future cash
flows more accurately than those with a lower level of ethical commitment. We also
find that corporate commitment to business ethics has perpetuating effects on future
financial reporting quality.
Nigeria perspective
Ogbonna and Appah (2011) investigated the effect of ethics on financial
reporting quality in Nigeria using a sample of 123 accountants. The study found out
that ethical compliance by the accountant positively and significantly affects the
quality financial reports. Flugrath, Bennie & Chen (2007) conducted a study on ethics
nd financial reporting quality using a sample of 112 professional accountants using
primary data. The results indicate that the presence of ethics has a positive impact on
the quality of the judgement made by professional accountants. Berrone, suroca, Tribo
(2009) carried out a study using 515 companies using OLS regression analysis. Their
study reveals that a strong corporate ethical identity was positively related to high
levels of stakeholder satisfaction. In turn stakeholder satisfaction had a positive
influence on the financial performance of the firm.
2.4 Gap in Literature
The gap in studies reviewed that research made so far from developed,
developing countries and in Nigeria in particular, there has not been any direct study
carried out on Accounting ethics and Financial Reporting Qualities of Quoted Firms
in Nigeria. However, this research will be focusing on this aspect

28
 CHAPTER THREE
RESEARCH METHODOLOGY

This chapter describes the statistical methods used in analyzing the data
obtained during the course of this study and the relevant interpretation for the
statistical output, and this interpretation was used to determine the nature of
relationship that exist between the dependent and independent variables. The variables
considered by this study are accounting ethic and financial reporting quality. This
chapter comprises of the area of the study, research design, study variable, population
of the study, sampling techniques, sample size, sources of data, method of data
collection, method of data analysis and model specification.

3.1 Research Design

Before this task can be effectively performed, some investigations were carried
out, data was carefully collected analyzed. Especially, questionnaire was used as
instrument for the study; techniques were selected in the merit of each one and so
combine together to satisfy the desire of the researcher.
3.2 Area of the Study
The area of study for this research work is Ibadan, this area was chosen because
this is where the 10 selected quoted firms are located and accessible at the time of the
research.
3.3. Population of the Study
The population of study for this research work includes all quoted firms, which
according to information on the Nigeria Stock Transaction website were, one hundred
and seventy one (171) in number as at March 2017, but for the purpose of this study,
only 10 quoted firms listed on the Nigeria Stock exchange were considered, and
details of the companies selected are available under the Sample Size/Sample

29
Technique section below, These companies were chosen based on the availability of
detail data as at the time of conducting this research work.
3.4 Sample size and Sampling Technique
Sampling frame is defined as a comprehensive list of individuals or an object from
which the sample is drawn (Drost, 2011). The sampling technique used for this study
is stratified sampling technique, which involves the quoted firms in stratum also called
sectors and selecting 10 firms proportionally across the sector. The firms are in
Ibadan, Oyo State which will be used to represent the data of all other firms in
Nigeria. 10 respondents would be randomly selected from each firm which made up
the sample size

3.5 Source of Data

3.5.1 Primary Data: These include method of data collection in which data are
directly collected from staff in a written down form, in this respect researchers uses:
Questionnaire: The writer of this project was giving permission by the
management of the case study to serve questionnaire to the accounting department of
the company and other departments of the company. The questions asked were based
on the various processes, procedure used in carrying out the various operations of
preparing financial statement. To ensure relevance and truthfulness of all information,
the writer makes sure that the questionnaire was served under mutual and conducive
atmosphere, with no element of compulsion or under pressure of the staff.
3.5.2 Secondary Data
The above mentioned method of data collection is not as reliable as the primary
data collection, but it attributes in no small measure to the perfection of the research
work. The following techniques were employed under this system.
i. Text Book: relevant text books written out by popular authorities in auditing
and relevant field were consulted by the researchers in the cause of this study.

30
 Journal and News Paper: the researchers also spent a lot of time reading some
important books and articles written out by knowledgeable people particularly
accountants and journals kept by school library which helped the researchers in
compiling the project work

3.6 Research Instrument

The instrument used was a research-made questionnaire checklist to gather the
needed data from the respondent. The draft questionnaire was drawn out based on the
research’s reading, previous studies, professional literature, published and
unpublished thesis relevant to the study. In preparation of the instrument, the
requirements in the designing of good data collection instrument were considered.

3.7 Validity and Reliability of Research Instrument Statistical Techniques

Validity test was carried out to examine the ability of the research instrument to
measure the variables that are relevant to its objective. Therefore, both face and
content validity were employed in this study. The face validity requires an analysis of
the validity of the scale (i.e. Likert scale – Strongly agreed, agreed, disagreed,
undecided, strongly disagreed) used for the research instrument and ensuring that the
questions used contain the important items that are relevant to the study, while the
content validity ensures that research instrument(i.e. the questionnaire) has an
adequate coverage of scope and objective of the study, which was achieved by giving
the questionnaires to the an experts (i.e. the supervisor and other lecturers) for review.
The reliability test for this research work was done by adopting a test –retest
approach, which involve distributing hundred (100) pilot questionnaire to respondents
considered in this study.

31
 CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

This chapter intends giving a detailed analysis of the data collected during the
survey and to present them in a suitable and comprehensive forms or manner. This
will facilitate understanding of results arrived at thereof.

The data for our analysis were primarily derived from the responses of our
respondents as contained in the questionnaires administered. The response of our
interviewers to our interview was equally used to enhance the quality of our data for
clarity and objectivity.

In the questionnaire distributed, the questions asked were structured in such a

way as to raise an enquiry into the study Accounting ethics and financial reporting
qualities of quoted firms in Nigeria. A grand total of 100 questionnaires were
administered to 10 quoted firms in Ibadan, Oyo state of which 75 respondents were
obtained.

Table 4:1 Responses to questionnaires administered

Number of questionnaire Number of responses Response rata (%)

100 65 65
Source: field work 2018.

From the table 4:1 above, it was cleared that out of the 100 questionnaire that
administered, 65 were retrieved, while 35 was not retrieved which represent 65%
(percentage) and the non-response rate of 35% (percent) respectively.

4.1 Presentation and Analysis Results

The researcher draws ups a series of tables to reflect the responses of the
respondents, following an analysis of the findings.
32
4.2 Responses of Firms According to Profession

The various professions of the prospective respondents were taken into

considerations in the administration of the questionnaire. The management was
basically with a view of given a fair representation and possibility of extraction of
information or data from professionals in the accounting field.

Table 4.1: Background Information of Respondents

s/n Details Number of responses Percentage (%)

1 Gender:
Male 29 44.6
Female 36 55.4
Total 65 100
2 Age:
18-30 years 32 49.2
31-50 years 22 33.8
50 years and 11 17
above
Total 65 100
3
Educational
Qualification: - -
OND 36 55.4
B.SC/HND 22 33.8
MBA 6 9.2
MSc 2 3.1
PhD
Total 65 100
4
Professional
Qualification: -
AAT - 23
ACA 15 77
FCA 50 -
Others -
Total 65 100

33
 5 Years of
Experience:

6- 10 20 30.8
10-15 39 60
15 and above 6 9.2

Total 65 100
6 Marital status:
Single 25 38.5
Married 40 61.5
Divorced - -
Widow/Widower - -
Total 65 100
Source: field work 2018.

From the above table, it is shows the gender of the 65 respondents, 29

respondents 44.6% were males while 36 of them representing 55.4 were females.

For the ages of the 65 respondents, 32 representing 49.2% were in between the
age of 18-30 years, 22 representing 33.8% were in between the age of 31-50 years, 11
representing 17% were in between the age of 50 and above respectively.

For the educational qualification of the 65 respondents, 0 representing 0% were

having OND certificate, 36 representing 55.4% were holders of B.SC/HND certificate,
22 representing 33.8% were holders of MBA qualification, 6 representing 9.2% were
holders of MSc qualification and 2 representing 3.1% were holder PhD qualification
respectively.

For the years of experience of the 65 respondents, 20 representing 30.8% were

having 6-10 years of experience, 39 representing 60% were having 11-15 years of
experience, 6 representing 9.2% were having 15 years experience and above
respectively.

34
 For the marital status of the 65 respondents, 25 of them representing 38.5%
were single while 40 of them representing 61.5% were married.

Research question one

Relationship between accounting disclosures and quality of financial reporting.

Responses to items 7, 8, 9, 10 and 11 on the questionnaire were analyzed and used to

test Research Question One as shown in the table below:

Table 4.2 – Tabular Analysis of Responses to Research Question One

Items Questions Variables No. (%)

of
Respondents
7 Disclosure enables management of Strongly agree 45 69.2
an organization in planning, analysis, Agreed 15 23.1
benchmarking and decision making. Disagreed 5 7.7
Total 65 100
8 Disclosure enables investors, Strongly agree 49 75.4
promoters, debt provider and creditors Agreed 10 15.4
to make rational and prudent decisions Disagreed 6 9.2
regarding investment, credit etc. Total 65 100
9 Disclosure in financial statement for Strongly agree 48 73.8
statutory auditors facilitates quality
financial report audit Agreed 17 26.2

Disagreed - -
Total 65 100

10 Disclosure in Financial reporting helps Strongly agree 20 30.8

35
 organizations to raise capital both Agreed 40 61.5
domestic as well as overseas Disagreed 5 7.7

Total 65 100

11 Disclosures have a great influence on Strongly agree 43 66.2

the quality of financial reporting Agreed 22 33.8
Disagreed - -

Total 65 100

Source: field work 2018.

Item 7 on the questionnaire: “Disclosure enables management of an

organization in planning, analysis, benchmarking and decision making”, was provided
with three variables. Out of the 65 respondents, 45 respondents (representing 69.2%)
strongly agreed that Disclosure enables management of an organization in planning,
analysis, benchmarking and decision making, 15 respondents (representing 23.1%)
agreed while the remaining 5 respondents (representing 7.7%) disagreed.
Item 8 on the questionnaire: “Disclosure Disclosure enables investors,
promoters, debt provider and creditors to make rational and prudent decisions
regarding investment, credit etc.”, was provided with three variables. Out of the 65
respondents, 49 respondents (representing 75.4%) strongly agreed that Disclosure
enables investors, promoters, debt provider and creditors to make rational and prudent
decisions regarding investment, credit, 10 respondents (representing 15.4%) agreed
while the remaining 6 respondents (representing 9.2%) disagreed.
Item 9 on the questionnaire: “Disclosure in financial statement for statutory
auditors facilitates quality financial report audit”, was provided with three variables.
Out of the 65 respondents, 48 respondents (representing 73.8%) strongly agreed that
Disclosure in financial statement for statutory auditors facilitates quality financial
36
 report audit, 17 respondents (representing 26.2%) agreed while 0 respondents
(representing 0%) disagreed.
Item 10 on the questionnaire: “Disclosure in financial reporting helps
organizations to raise capital both domestic as well as overseas”, was provided with
three variables. Out of the 65 respondents, 20 respondents (representing 30.8%)
strongly agreed that Disclosure in financial reporting helps organizations to raise
capital both domestic as well as overseas, 40 respondents (representing 61.5%) agreed
while the remaining 5 respondents (representing 7.7%) disagreed.
Item 11 on the questionnaire: “Disclosures have a great influence on the quality
of financial reporting”, was provided with three variables. Out of the 65 respondents,
43 respondents (representing 66.2%) strongly agreed that Disclosures have a great
influence on the quality of financial reporting, 22 respondents (representing 33.8%)
agreed while 0 respondents (representing 0%) disagreed.
Research Question Two

Accounting Ethics and Quality of Financial Reporting

Responses to items 12, 13, 14, 15, 16 and 17 of the research questionnaire were
analyzed and used to test research question two as shown in the table below:
Table 4.3 – Tabular Analysis of Responses to Research Question Two
Items Questions Variables No. (%)
of
Respondents
12 Conduct of accountants in quoted Strongly agree 50 76.9
firms in Nigeria is guided by laid Agreed 15 23.1
down ethical framework. Disagreed - -
Total 65 100

37
13 There is a positive relationship Strongly agree 20 30.8
between the defined work ethics and Agreed 40 61.5
financial reporting qualities Disagreed 5 7.7
Total 65 100
14 Code of accounting ethic enhances Strongly agree 53 81.5
financial reporting quality. Agreed 12 18.5
Disagreed - -
Total 65 100

15 Situation/personal ethics influences Strongly agree 15 23.1

professional ethics Agreed 30 46.2
Disagreed 20 30.8

Total 65 100

16 Accounting professional bodies has Strongly agree 55 84.6

a role to play in enhancing Agreed 10 15.4
accounting ethics. Disagreed - -

Total 65 100

7 Societal norms play a negative role Strongly agree 40 61.5

in enforcing viz-a-vis poor financial Agreed 17 26.2
reporting qualities. Disagreed 8 12.3

Total 65 100

Source: field work 2018.

38
 Item 12 on the questionnaire: “Conduct of accountants in quoted firms in
Nigeria is guided by laid down ethical framework”, was provided with three variables.
Out of the 65 respondents, 50 respondents (representing 76.9%) strongly agreed that
Conduct of accountants in quoted firms in Nigeria is guided by laid down ethical
framework, 15 respondents (representing 23.1%) agreed while 0 respondents
(representing 0%) disagreed.
Item 13 on the questionnaire: “There is a positive relationship between the
defined work ethics and financial reporting qualities”, was provided with three
variables. Out of the 65 respondents, 20 respondents (representing 30.8%) strongly
agreed that there is a positive relationship between the defined work ethics and
financial reporting qualities, 40 respondents (representing 61.5%) agreed while the
remaining 5 respondents (representing 7.7%) disagreed.
Item 14 on the questionnaire: “Code of accounting ethic enhances financial
reporting quality”, was provided with three variables. Out of the 65 respondents, 53
respondents (representing 81.5%) strongly agreed that Code of accounting ethic
enhances financial reporting quality, 12 respondents (representing 18.5%) agreed
while 0 respondents (representing 0%) disagreed.
Item 15 on the questionnaire: “Situation/personal ethics influences professional
ethics”, was provided with three variables. Out of the 65 respondents, 15 respondents
(representing 23.1%) strongly agreed that Situation/personal ethics influences
professional ethics, 30 respondents (representing 46.2%) agreed while the remaining
20 respondents (representing 30.8%) disagreed.
Item 16 on the questionnaire: “Accounting professional bodies has a role to
play in enhancing accounting ethics”, was provided with three variables. Out of the 65
respondents, 55 respondents (representing 84.6%) strongly agreed that Accounting
professional bodies has a role to play in enhancing accounting ethics, 10 respondents
(representing 15.4%) agreed while 0 respondents (representing 0%) disagreed.

39
 Item 17 on the questionnaire: “Societal norms play a negative role in enforcing
viz-a-vis poor financial reporting qualities.”, was provided with three variables. Out of
the 65 respondents, 40 respondents (representing 61.5%) strongly agreed that Societal
norms play a negative role in enforcing viz-a-vis poor financial reporting qualities., 17
respondents (representing 26.2%) agreed while the remaining 8 respondents
(representing 12.3%) disagreed.
4.3 Testing of Hypotheses
The hypothesis was tested from using data collected questionnaire distributed the
researcher used the standard deviation formula.
SD Σf (x-2)2
Σf
Where,
Σ= total number of observation
X = the value of the variable
X = arithmetic mean of the distribution
F = the product of the value of the variable and the relative frequency.
However, the actual computation is shown in the appendix but the decisions
reached from the calculation are shown below.
Hypothesis One
Ho: There is no significant relationship between disclosures as an accounting ethical
principle on the quality of financial reporting of quoted firms in Nigeria.
Hi: There is significant relationship between disclosures as an accounting ethical
principle on the quality of financial reporting of quoted firms in Nigeria.

40
Variable Response Frequency
Strongly agree 45 69.2
Agreed 15 23.1
Disagreed 5 7.7
Total 65 100

The response were analyzed as follows:

Variable X F Fx X-x (X-x)2 F (X-x)2
Strongly agree 45 69.2 3114 0.3 0,09 6.2
Agreed 15 23.1 346.5 -0.7 0.49 5.5
Disagreed 5 7.7 38.5 -1.7 2.87 22.3
100 3499 34

X = Σfx =3499
Σf Σf = 34.9
SD = Σf (X-x)2 =34
Σf =100 = 0.34
DECSION: From the analysis, the alternative hypothesis is valid, while the null
hypothesis is rejected.

41
Hypothesis Two
Ho: There is no relationship between ethics and the financial reporting quality of
quoted firms in Nigeria.
Hi: There is a relationship between ethics and the financial reporting quality of quoted
firms in Nigeria.

Variable Response Frequency

Strongly agree 50 76.9
Agreed 15 23.1
Disagreed - -
Total 65 100

Variable X F Fx X-x (X-x)2 F (X-x)2

Strongly agree 50 76.9 3845 4.3 0.16 12.3
Agreed 15 23.1 346.5 -0.6 0.36 5.4
Disagreed - - - - -
100 4191.5 17.7

X = Σfx =4191.5
Σf 100 = 41.9
SD = Σf (X-x)2 =17.7
Σf =100 = 0.177
DECSION: From the analysis, the alternative hypothesis is valid, while the null
hypothesis is rejected

42
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMEDATIONS

5.1 Summary

This study has been set out to critically examine accounting ethics and financial
reporting qualities of quoted firms in Nigeria.

This study looked at the meaning of accounting ethics, financial report, how
accounting ethics helps to facilitate quality financial reporting of quoted firms in
Nigeria.

The data collected using the questionnaire were analyzed using 65 sample
population size of the study, it has been revealed that accounting ethics and financial
reporting qualities of quoted firms Nigeria have positive correlation.

5.2 Conclusion

Having carefully interpreted the various findings relating to this study, it has
been seen that Ethical codes of the accounting profession have a strong influence on
the financial reporting qualities of quoted firms. Therefore, accountants compliance on
the ethical code of conduct and practice in financial reporting will go a long way in
ensuring that organizations have quality and reliable financial statement. Accountants
are expected to have high level of integrity, objectivity, honest, independent,
competent, disclosure and accountable when performing or carrying out their duties,
and when these ethical codes of conducts are exhibited, it would result to the
production of quality/reliable financial statements which will give a true and fair view
of the financial position and performance of the business. And the implication of a

43
quality and reliable financial statement/report would lead to quality and better
informed decision making by all stakeholders.

5.3 Recommendations
Relying on the above findings and conclusions, the following recommendations
were offers:
i. Professional Accounting bodies in Nigeria should adopt or design/update of
better ethical codes conduct because of the ever changing environment.
ii. Accountants should always adhere to ethically conduct in discharging their
official responsibilities, so as to produce a quality and reliable financial
statements.
iii. Accountant should always implement their ethical codes of conduct in order
to maintain commitment in achieving all stakeholders trust.
iv. Firms should encourage ethical behavior in the company by educating and
creating awareness on the importance of ethical behavior and accounting
ethics.
v. Firms should set up an ethical compliance committee to help check and
reward ethical behavior in the organization in order to create conducive
working environment.

44
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