Product Market Competition and Likelihood of Fraudulent Financial Reporting in Listed Foods and Beverages Firms in Nigeria: The Mediating Effect of Financial Performance

Abstract

Areview of several studies that examined the effect of product market competition on financial reporting behaviour of firms globally revealed that Nigeria was under explored. This study therefore assessed the effect of product market competition on fraudulent financial reporting of foods and beverages manufacturing listed on the Nigerian Exchange Group (NGX) from 2020 to 2023. It also sought to ascertain the mediating effect financial performance on the link between product market competition and fraudulent financial reporting of listed foods and beverages manufacturing firms in Nigeria. The study obtained data from the annual reports of 14 firms. It measured product market competition using Lerner Index. M-Score was the measure of fraudulent financial reporting while return on assets was the proxy for financial performance. The study was anchored on Agency Theory and information Theory. It tested the formulated hypothesis using logistic regressions and Ordinary Least Square Regressions. Findings revealed that product market competition has a significant positive effect on fraudulently financial reporting. It however failed to establish financial performance as the mediator in the product market competition- fraudulently financial reporting nexus. of listed foods and beverages manufacturing firms in Nigeria. The study recommended that stakeholders should pay close attention to the financial reports of firms facing intense product market competition. It suggested further studies using more than one industry and proxies of product market competition as well as different measure of detecting fraudulently financial reporting.

Keywords

• Fraudulent financial reporting
• financial performance
• food and beverages
• manufacturing firms
• product market competition

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