Theophilus Anaekenwa Aguguom, Rafiu Oyesola Salawu
Studies of earnings smoothing reveal inconclusiveness as most corporate organizations consider earnings smoothing irresistible. A theoretical debate suggests that earnings smoothing happens as a strategic flattening of curves to remain afloat or intentionally to fix managerial incompetence. Following this argument, this paper investigates the impact of earnings smoothing on the market share price of listed companies in Nigeria. The study adopts ex-post facto research design using data sourced from published financial statements of selected companies. The population comprises 173 listed companies in Nigeria, covering a period of 2009-2020 as of 31st December 2020. 51 companies were purposively selected. The reliability and validity of the data are based on financial statements audited by the external auditors. The panel data is employed for the estimation using the Unobserved Effects Model (UEM), and Hausman test results to choose between random effect and fixed-effect models. The study finds that earnings smoothing has a positive significant on market share price. Introducing controls variables, SMOTH exhibits a negative significant impact on MSP while LEV reveals a negative significant. The study recommends that managers should excise flexibility within the allowed legal and ethical framework in earnings reporting and desist from using unethical practices that could undermine the quality and credibility of financial statements.