Structuring activities into responsibility centers and optimization of resource is a priority in meeting investors’ performance and profitability expectations in both small and large organizations. Studies have shown that to meet these expectations, adequate performance evaluation and reward system are managers’ challenges. This study investigated the effect of responsibility accounting on profitability of listed companies in Nigeria. Ex-post facto research design was adopted. The population was 173 quoted companies on the Nigerian Stock Exchange as at 31st December 2016. Ten companies were selected using stratified and purposive sampling technique. Data were extracted from published financial statements of sampled companies; validity and reliability of the data were premised on the scrutiny of the external auditors. Descriptive and inferential (Panel data regression) statistics were used to analyze the data. The study revealed that profitability measured by NPBT, of listed companies in Nigeria is significantly influenced by responsibility accounting (RA), F-Stat=114.56, AdjR2=.0.6964, p=0.000. There is no significant difference in the result of NPBT with and without the control variable of firm size. The result with control variables revealed F-Stat=87.63; AdjR2=0.7242; P=0.000. The study also revealed that RA had a positive significant relationship with EPS with control variables of firm size, F-Stat=6.56, AdjR2=0.1442; P=0.000. However, without control variables, no significant effect of responsibility accounting on EPS was observed as shown in the following result: F-Stat=0.45, AdjR2=-0.0112, p=0.64. Furthermore, the study revealed that profitability measured by ROA exhibited an insignificant relationship with RA given the following results, AdjR2=0.0089; P=0.000. RA with control variables of firm size, insignificantly affected ROA while Firm Size exerted significant positive effect on ROA (as the size of the firm changes by a unit, ROA increased by 23.9% as seen in model 3b) given the following result: AdjR2=0.0399; P=0.782. This study concluded that responsibility accounting had an influence on profitability of listed companies in Nigeria. The study recommended that since profitability is the whole essence of responsibility accounting, managers should ensure delegation of task with responsibilities clearly spelt out, regular appraisal process, achievable project budgeting, instituting cross functional teams and efficient reward systems put in place towards achieving the corporate objective that would influence better profitability.
| Published in | International Journal of Accounting, Finance and Risk Management (Volume 5, Issue 2) |
| DOI | 10.11648/j.ijafrm.20200502.15 |
| Page(s) | 101-117 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2020. Published by Science Publishing Group |
Activity Centers, Decentralization, Evaluations, Profitability, Responsibility Accounting
| [1] | Abebe, A. K., & Abera, M. T. (2019). Determinants of financial performance; Evidence from Ethiopia insurance companies. Journal of Accounting, Finance and Auditing Studies, 5 (1), 155-172. |
| [2] | Abo, N., & Mohamad, H. (2010). The administrative accounting. (1st Ed). Dar Wael, Amman Jordan. |
| [3] | Adegbie, F. F., Olusanjo, O. R., & Olaoye, A. S. (2018). Application of responsibility accounting to productivity evaluation in the Nigerian quoted companies. Journal of Advance Research in Business Management and Accounting, 4 (6), 1-24. |
| [4] | Akeju, J. O. (2011). Financial accounting for beginners. (1st Ed). Shomolu, JBA Associates Ltd. Shomolu Lagos. |
| [5] | Akenbor, C. O., & Nkem, N. J. (2013). The effectiveness of responsibility accounting in evaluating Segment performance of manufacturing firms. Journal of Accounting Research and Practices, 2 (2), 103-112. |
| [6] | Al-Nimer, M., & Warrad, L. (2015). The impact of liquidity on Jordanian banks profitability. European Journal of Business and Management, 7 (1), 412-430. |
| [7] | AlMutari, M. N. (2011). The effect of responsibility accounting on the profitability of Kuwaiti oil Companies. (MA Thesis) University of Middle East, Amman, Jordan. |
| [8] | Alshomaly, I. Q. (2013). Performance evaluation and responsibility accounting. Journal of Research, 5 (2), 45-52. |
| [9] | Berle, A. A., & Means, G. C. (1932). The Modern corporation and private property. (3rd Ed) New York: Harcourt, Brace & World Publishers. |
| [10] | Biswas, T. (2017). Responsibility accounting: A review of related literature. International Journal of Multidisciplinary Research and Development, 4 (8), 202-206. |
| [11] | Bygrave, W. D., Hay, M., Ng, E., & Reynolds, P. (2003). A study of informal investing in 29 Nations composing the global entrepreneur monitor: Venture capital. An International Journal of Entrepreneurial Finance, 5 (1), 101-116. |
| [12] | Chartered Institute of Management Accountant (2015). Responsibility Accounting. |
| [13] | Derbali, A., & Jamel, L. (2018). Determinants of performance of Tunisia insurance companies: Case of life insurance. Journal of Business and Insurance, 2 (1), 25-39. |
| [14] | Deloof, M. (2013). Does working capital management affect profitability of Belgian firms? Journal of Business and Finance Accounting, 30 (1), 573-587. |
| [15] | Diamond, D. W. (1984). Financial intermediation and delegated monitoring. Review of Economic Studies 51 (166), 393. |
| [16] | Dow, J., & Gorton, G. (1997). Stock market efficiency and economic efficiency: Is there a connection? Journal of Finance, 2 (1), 1087-1129. |
| [17] | Eliwa, Y. A. M. (2015). The Impact of earnings quality on aspects of capital markets: Evidence from UK listed firms. (Doctoral thesis). Heriot-Watt university school of management and languages http://www.ros.hw.ac.uk/bitstream/handle/10399/3005/EliwaY_0615_sml.pdf?sequence=1. Retrieved 1/05/2018 |
| [18] | Fakir, A. A., Islam, M. Z., & Miah, M. S. (2014). The Use of Responsibility Accounting in Textile Industry in Bangladesh. Journal of Business Studies, 35 (2), 261-273. |
| [19] | Fowzia, R. (2011). Use of responsibility accounting and measure of the satisfaction level in service organizations in Bangladesh. International Reviews of Business Research, 7 (2), 53–67. |
| [20] | Friebel, G., & Raith, M. (2009). Resource Allocation and Firm Scope. (3rd Ed). Center for Economic Research Journal, 2 (1), 220-221. |
| [21] | Gharaibeh, B, (2008). The extent of the application of Jordanian Industrial Corporations companies, the responsibility accounting and its impact on profitability and operational efficiency, (Unpublished Master dissertation), University of Jordan, Amman, Jordan |
| [22] | Gray, S. (2016). Responsibility accounting practices in India. International Conference on Multidisciplinary Research and Practice, 3 (1), 25-40. |
| [23] | Goel, S., Mazzola, P., Phan, P. H., Pieper, T. M., & Zachary, R. K. (2012). Strategy, ownership, governance, and socio-psychological perspectives on family businesses from around the world. Journal of Family Business Strategy, 3 (1), 54-65. |
| [24] | Hanini, A. (2013). The extent of implementing responsibility accounting features in the Jordanian banks. European Journal of Business and Management, 5 (1), 217-229. |
| [25] | Harward, G., & Upto, W. (1960). Introduction to Business Finance. (1st Ed), New York. McGraw Hill, New York. |
| [26] | Hifza, M. (2011). Determinants of insurance company’s profitability: An analysis of insurance sector of Pakistan. Academic Research International, 1 (3), 23-45. |
| [27] | Horngren, C. T. (2006). Accounting for management control an introduction, England, Prentice Hall, p. 277. |
| [28] | Jensen, C., Meckling, H., (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3 (4), 305-360. |
| [29] | Karasioghu, F., & Gokturk, I. E. (2012). The application of responsibility accounting system with the scope of increasing efficiency in hospital business in Turkey. Journal of Finance 11 (1), 199-203. |
| [30] | Kingsley, O. E. O., Endurance, O., Sunny, A. I., & Ozele, E. (2014). Responsibility accounting: an overview. Journal of Business and Management, 16 (1), 73-79. |
| [31] | Kishore, S. D., & Ghosh, D. (2016). Analysis of motivation issues and link with profitability: Case study of entrepreneurial firms in a rural cluster in West Bengal, India. Business and Economic Journal, 7 (4), 21-39. |
| [32] | Machdar, N. M. (2019). Impact of corporate governance on company’s performance with sustainability reporting as an intervening variable in Indonesia. Advances in Economics, Business and Management Research, 1 (1), 23-35. |
| [33] | Magablih, A. M. (2017). The reflection of social responsibility accounting application in the insurance companies. International Journal of Economics and Finance, 9 (7), 241-252. |
| [34] | Makori, D. M., & Jagongo, A. (2013). Environmental Accounting and Firm Profitability: An Empirical Analysis of Selected Firms Listed in Bombay Stock Exchange, India. International Journal of Humanities and Social Science, 3 (18), 248-256. |
| [35] | Mojgan, S. (2012). Examining the role of responsibility accounting in organizational structure. American Academic & Scholarly Research Journal, 4 (5), 401-432. |
| [36] | Muneer, M, F, J., & Farouq, A. A., Mohammed, A, R., & Ata, M. A. (2015). The availability of components accounting responsibility in industrial companies in Aqaba City. European Scientific Journal, 8 (22), 58-62. |
| [37] | Nawaiseh, M. E., Zeidan, A., Falahat, M., & Otish, A. (2014). An empirical assessment of measuring the extent of implementing responsibility accounting rudiments in Jordanian industrial companies listed at Amman Stock Exchange. Advances in Management & Applied Economics, 4 (1), 123–138. |
| [38] | Nedles, B. E., Powers, M., & Crosson, S. V. (2002). Financial and management accounting (3rd Ed). Houghton Mifflin Company Boston, New York. ISBN: 0-618-10231-0 |
| [39] | Nibedita, D. (2018). Impact of corporate governance on financial performance: A study on DSE listed insurance companies in Bangladesh. Global Journal of Management and Business Research: Accounting and Auditing, 18 (2), 33-39. |
| [40] | Niresh, J. A., & Velnampy, T. (2014). Firm size and profitability: A study of listed manufacturing firms in Sri Lanka. International Journal of Business and Management, 9 (4), 112-125. |
| [41] | Nyakuwanika, M., GutuG, J., Zhou, S., Tagwireyi, F., & Chidoko, C. (2012). An analysis of effective responsibility accounting system strategies in the Zimbabwean Health Sector Research Journal of Finance and Accounting, 3 (8), 86-92. |
| [42] | Ocansey, E. O. N. D., & Enahoro, J. A. (2012). Determinant controllability of responsibility accounting in profit planning. Canadian Social Science, 8 (2), 91–95. |
| [43] | Owino, P., (2017). Responsibility accounting in Ugandan public universities: Agency relation consideration. International Journal of Educational Policy Research and Revi. 4 (4), 62-71. |
| [44] | Owolabi, S. A., Obida, S. S. (2012). Liquidity management and corporate profitability: Case study of selected manufacturing companies listed on the Nigerian Stock Exchange. Journal of Business Management Dynamics, 2 (2), 10-25. |
| [45] | Padachi, K. (2016). Trends in working capital management and its impact on firms’ performance: Analysis of Mauritanian small manufacturing firms. International Review of Business Research Papers, 2 (2), 45-58. |
| [46] | Pajrok A. (2014). Responsible accounting in the hospitality industry, Journal of Education culture and society. 5 (2), 53-60. |
| [47] | Panda, B., & Leepsa, N. M. (2017). Agency theory: Review of theory and evidence on problems and perspectives. Indian Journal of Corporate Governance, 10 (1), 74–95. |
| [48] | Patel, A. T. (2012). Responsibility Accounting: A study in theory and Practice. Indian Journal of Applied Research, 3 (3), 1-2. |
| [49] | Rani, R., & Rani M. (2015). The role of responsibility accounting in organizational structure, International journal of Science, Technology and Management, 41 (1), 185-190. |
| [50] | Said, A. (2012). Comparing the change in efficiency of the Western and Islamic banking systems. Journal of Money, Investment and Banking ISSN 145-288X (8). |
| [51] | Stilwell, J. (2015). Total capital efficiency: An economic theory of sustainability development. European Journal of Business and Social Sciences, 3 (3), 101-120 |
| [52] | Umobong, A. (2015). Assessing the impact of liquidity and profitability ratios on growth of profits in Pharmaceutical firms in Nigeria. European Journal Of Accounting, Auditing And Finance Research, 3 (10), 97-114. |
| [53] | Yang, C., & Modell, S. (2012). The economic sociology of responsibility accounting: A field study in a Chinese state owned enterprise. Manchester, New Helhi: Business School University of Manchester. |
| [54] | Zahoor, H. J., & Huma, R., Bader, A., & Muhammad, F. N. (2015). Effect of financial leverage on performance of the firms: Empirical evidence from Pakistan. Journal of Economics and Business, 65 (1-2), 87-95. |
| [55] | Zerbe, R. O. (2001). Economic efficiency in law and economics, Cheltenham, UK: Edward Elgar Publishing. |
| [56] | Zhai, J., & Wang, Y. (2016). Accounting information quality, governance efficiency and capital investment choice. China Journal of Accounting Research, 2 (1), 55-79. |
| [57] | Zimmerman, J. L. (2011). Accounting for decision making and control. (2ndEd) Singapore: Irwin McGraw-Hill Education. |
APA Style
Adegbie Folajimi Festus, Urewa Ochai-Adejoh, Owolabi Babatunde Ayodeji. (2020). Responsibility Accounting and Profitability of Listed Companies in Nigeria. International Journal of Accounting, Finance and Risk Management, 5(2), 101-117. https://doi.org/10.11648/j.ijafrm.20200502.15
ACS Style
Adegbie Folajimi Festus; Urewa Ochai-Adejoh; Owolabi Babatunde Ayodeji. Responsibility Accounting and Profitability of Listed Companies in Nigeria. Int. J. Account. Finance Risk Manag. 2020, 5(2), 101-117. doi: 10.11648/j.ijafrm.20200502.15
AMA Style
Adegbie Folajimi Festus, Urewa Ochai-Adejoh, Owolabi Babatunde Ayodeji. Responsibility Accounting and Profitability of Listed Companies in Nigeria. Int J Account Finance Risk Manag. 2020;5(2):101-117. doi: 10.11648/j.ijafrm.20200502.15
Share This Article
Twitter
Linked In
Facebook
Copy
Download@article{10.11648/j.ijafrm.20200502.15,
author = {Adegbie Folajimi Festus and Urewa Ochai-Adejoh and Owolabi Babatunde Ayodeji},
title = {Responsibility Accounting and Profitability of Listed Companies in Nigeria},
journal = {International Journal of Accounting, Finance and Risk Management},
volume = {5},
number = {2},
pages = {101-117},
doi = {10.11648/j.ijafrm.20200502.15},
url = {https://doi.org/10.11648/j.ijafrm.20200502.15},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20200502.15},
abstract = {Structuring activities into responsibility centers and optimization of resource is a priority in meeting investors’ performance and profitability expectations in both small and large organizations. Studies have shown that to meet these expectations, adequate performance evaluation and reward system are managers’ challenges. This study investigated the effect of responsibility accounting on profitability of listed companies in Nigeria. Ex-post facto research design was adopted. The population was 173 quoted companies on the Nigerian Stock Exchange as at 31st December 2016. Ten companies were selected using stratified and purposive sampling technique. Data were extracted from published financial statements of sampled companies; validity and reliability of the data were premised on the scrutiny of the external auditors. Descriptive and inferential (Panel data regression) statistics were used to analyze the data. The study revealed that profitability measured by NPBT, of listed companies in Nigeria is significantly influenced by responsibility accounting (RA), F-Stat=114.56, AdjR2=.0.6964, p=0.000. There is no significant difference in the result of NPBT with and without the control variable of firm size. The result with control variables revealed F-Stat=87.63; AdjR2=0.7242; P=0.000. The study also revealed that RA had a positive significant relationship with EPS with control variables of firm size, F-Stat=6.56, AdjR2=0.1442; P=0.000. However, without control variables, no significant effect of responsibility accounting on EPS was observed as shown in the following result: F-Stat=0.45, AdjR2=-0.0112, p=0.64. Furthermore, the study revealed that profitability measured by ROA exhibited an insignificant relationship with RA given the following results, AdjR2=0.0089; P=0.000. RA with control variables of firm size, insignificantly affected ROA while Firm Size exerted significant positive effect on ROA (as the size of the firm changes by a unit, ROA increased by 23.9% as seen in model 3b) given the following result: AdjR2=0.0399; P=0.782. This study concluded that responsibility accounting had an influence on profitability of listed companies in Nigeria. The study recommended that since profitability is the whole essence of responsibility accounting, managers should ensure delegation of task with responsibilities clearly spelt out, regular appraisal process, achievable project budgeting, instituting cross functional teams and efficient reward systems put in place towards achieving the corporate objective that would influence better profitability.},
year = {2020}
}
TY - JOUR T1 - Responsibility Accounting and Profitability of Listed Companies in Nigeria AU - Adegbie Folajimi Festus AU - Urewa Ochai-Adejoh AU - Owolabi Babatunde Ayodeji Y1 - 2020/05/28 PY - 2020 N1 - https://doi.org/10.11648/j.ijafrm.20200502.15 DO - 10.11648/j.ijafrm.20200502.15 T2 - International Journal of Accounting, Finance and Risk Management JF - International Journal of Accounting, Finance and Risk Management JO - International Journal of Accounting, Finance and Risk Management SP - 101 EP - 117 PB - Science Publishing Group SN - 2578-9376 UR - https://doi.org/10.11648/j.ijafrm.20200502.15 AB - Structuring activities into responsibility centers and optimization of resource is a priority in meeting investors’ performance and profitability expectations in both small and large organizations. Studies have shown that to meet these expectations, adequate performance evaluation and reward system are managers’ challenges. This study investigated the effect of responsibility accounting on profitability of listed companies in Nigeria. Ex-post facto research design was adopted. The population was 173 quoted companies on the Nigerian Stock Exchange as at 31st December 2016. Ten companies were selected using stratified and purposive sampling technique. Data were extracted from published financial statements of sampled companies; validity and reliability of the data were premised on the scrutiny of the external auditors. Descriptive and inferential (Panel data regression) statistics were used to analyze the data. The study revealed that profitability measured by NPBT, of listed companies in Nigeria is significantly influenced by responsibility accounting (RA), F-Stat=114.56, AdjR2=.0.6964, p=0.000. There is no significant difference in the result of NPBT with and without the control variable of firm size. The result with control variables revealed F-Stat=87.63; AdjR2=0.7242; P=0.000. The study also revealed that RA had a positive significant relationship with EPS with control variables of firm size, F-Stat=6.56, AdjR2=0.1442; P=0.000. However, without control variables, no significant effect of responsibility accounting on EPS was observed as shown in the following result: F-Stat=0.45, AdjR2=-0.0112, p=0.64. Furthermore, the study revealed that profitability measured by ROA exhibited an insignificant relationship with RA given the following results, AdjR2=0.0089; P=0.000. RA with control variables of firm size, insignificantly affected ROA while Firm Size exerted significant positive effect on ROA (as the size of the firm changes by a unit, ROA increased by 23.9% as seen in model 3b) given the following result: AdjR2=0.0399; P=0.782. This study concluded that responsibility accounting had an influence on profitability of listed companies in Nigeria. The study recommended that since profitability is the whole essence of responsibility accounting, managers should ensure delegation of task with responsibilities clearly spelt out, regular appraisal process, achievable project budgeting, instituting cross functional teams and efficient reward systems put in place towards achieving the corporate objective that would influence better profitability. VL - 5 IS - 2 ER -
Information
Email: