IBEABUCHI-Ani Ogechi
Michael Okpara University of Agriculture, Umudike
Department Of Banking and Finance
ogeibeabuchiani@gmail.com
OKAFOR Victor Ikechukwu
Michael Okpara University of Agriculture, Umudike
Department of Accounting
vi.okafor@mouau.edu.ng
08038970667
EGIYI Modesta Amaka
Godfrey Okoye University, Enugu
Department of Accountancy
megiyi@gouni.edu.ng
ABSTRACT
The need for the current study is borne by the ever-evolving business and finance landscape. As the
corporate landscape continues to evolve, maintaining high earnings quality remains a critical issue for
companies seeking sustainable profitability and long-term success. This is why the study examines the
effect of earnings quality on profitability of listed service companies on the Nigerian Exchange Group.
The study adopts the ex-post facto research design. The population for the study consists of the 23 listed
service companies. Using a judgmental sampling technique, the study selected 11 listed service
companies. The multivariate regression technique is used to analyze data gotten from the financial
statements of the companies for a period of 8 years (2015 to 2022). The study findings reveal that,
earnings response coefficient as a proxy for earnings quality has no significant effect on return on asset,
return on equity, and return on capital employed of the companies. Thus, it is recommended that, listed
service companies in Nigeria should put in place earnings response mechanisms like prompt earnings
announcement and more explanatory notes to enable more value relevant reporting that can spur
investment financing by investors. This will attract more external financing that will make available funds
for more profitable investment.
Keywords: Earnings response coefficient, profitability, and the signaling theory.