{"id":23105,"date":"2025-11-12T09:37:34","date_gmt":"2025-11-12T09:37:34","guid":{"rendered":"https:\/\/journals.amssr.org\/grjaf\/?p=23105"},"modified":"2025-11-12T09:37:44","modified_gmt":"2025-11-12T09:37:44","slug":"effect-of-earnings-quality-on-cost-of-equity-of-listed-oil-and-gas-companies-in-nigeria","status":"publish","type":"post","link":"https:\/\/journals.amssr.org\/grjaf\/2025\/11\/12\/effect-of-earnings-quality-on-cost-of-equity-of-listed-oil-and-gas-companies-in-nigeria\/","title":{"rendered":"Effect of Earnings Quality on Cost of Equity of Listed Oil and Gas Companies in Nigeria"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Download PDF<\/h2>\n\n\n\n<div data-wp-interactive=\"core\/file\" class=\"wp-block-file\"><object data-wp-bind--hidden=\"!state.hasPdfPreview\" hidden class=\"wp-block-file__embed\" data=\"https:\/\/journals.amssr.org\/grjaf\/wp-content\/uploads\/sites\/2\/2025\/11\/Effect-of-Earnings-Quality-on-Cost-of-Equity-of-Listed-Oil-and-Gas-Companies-in-Nigeria-GRJAF-AMSSRN.docx-1.pdf\" type=\"application\/pdf\" style=\"width:100%;height:600px\" aria-label=\"Embed of Effect of Earnings Quality on Cost of Equity of Listed Oil and Gas Companies in Nigeria GRJAF AMSSRN.docx (1).\"><\/object><a id=\"wp-block-file--media-3d3467b0-6526-4f02-9c6b-fa369d0e5630\" href=\"https:\/\/journals.amssr.org\/grjaf\/wp-content\/uploads\/sites\/2\/2025\/11\/Effect-of-Earnings-Quality-on-Cost-of-Equity-of-Listed-Oil-and-Gas-Companies-in-Nigeria-GRJAF-AMSSRN.docx-1.pdf\">Effect of Earnings Quality on Cost of Equity of Listed Oil and Gas Companies in Nigeria GRJAF AMSSRN.docx (1)<\/a><a href=\"https:\/\/journals.amssr.org\/grjaf\/wp-content\/uploads\/sites\/2\/2025\/11\/Effect-of-Earnings-Quality-on-Cost-of-Equity-of-Listed-Oil-and-Gas-Companies-in-Nigeria-GRJAF-AMSSRN.docx-1.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-3d3467b0-6526-4f02-9c6b-fa369d0e5630\">Download<\/a><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Authors<\/h2>\n\n\n\n<p>Luper Iorpev<sup> 1<\/sup>, Justin Iorakpen Iorun<sup> 2<\/sup> &amp; Michael Iorlaha<sup> 3<\/sup><\/p>\n\n\n\n<p><em><sup>1 &amp; 2 <\/sup><\/em><em>Department of Accounting, Benue State University, Makurdi, Nigeria<\/em><\/p>\n\n\n\n<p><em><sup>3 <\/sup><\/em><em>Department of Accounting, Prime University Abuja, Nigeria<\/em><\/p>\n\n\n\n<p><a href=\"mailto:michael.iorlaha@primeuniversity.edu.ng\"><em>michael.iorlaha@primeuniversity.edu.ng<\/em><\/a><\/p>\n\n\n\n<p><em>+234 9021366661<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Abstract<\/strong><\/h2>\n\n\n\n<p><strong>Research Objectives: <\/strong>This study examined the effect of earnings quality (EQ) on cost of equity (CoE) of listed oil and gas companies in Nigeria.&nbsp;<\/p>\n\n\n\n<p><strong>Methodology: <\/strong>The study employed ex-post facto research design with secondary data drawn from audited financial statements and Nigerian Exchange Group (NGX) publications covering the period from 2013 to 2024. A purposive sample of 10 firms was selected from the population of 12 listed oil and gas companies in Nigeria. Earnings quality was measured using four key proxies: accrual quality, earnings persistence, earnings predictability, and earnings smoothness. The cost of equity was calculated using the capital asset pricing model (CAPM). The study employed panel data regression analysis to capture both cross-sectional and time-series attributes, supported by diagnostic tests for multicollinearity, heteroskedasticity, and autocorrelation to validate the robustness of the model.&nbsp;<\/p>\n\n\n\n<p><strong>Findings: <\/strong>The results revealed that accrual quality, earnings predictability, and earnings smoothness exert statistically significant negative effects on the cost of equity, indicating that firms with higher quality, more predictable, and smoother earnings enjoy reduced equity financing costs. Conversely, earnings persistence was found to have no significant effect. These findings suggest that investors in Nigeria\u2019s oil and gas sector place greater value on transparent and stable earnings information than on the persistence of earnings.&nbsp;<\/p>\n\n\n\n<p><strong>Recommendations: <\/strong>The study recommends improved financial reporting transparency, particularly in accruals and forward-looking disclosures, stricter IFRS compliance enforcement by regulators, and more critical evaluation of earnings components by investors.<\/p>\n\n\n\n<p><strong><em>Key words<\/em><\/strong><em>: Accrual quality, Cost of Equity, Earnings Quality, Persistence, Predictability, Smoothness.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>References&nbsp;<\/strong><\/h2>\n\n\n\n<p>Ahmed, A. H., Tahat, Y., Eliwa, Y., &amp; Burton, B<strong>.<\/strong>&nbsp;(2021). Earnings quality and the cost of equity capital: Evidence on the impact of legal background.&nbsp;<em>International Journal of Accounting &amp; Information Management, 29<\/em>(4), 631\u2013650.<\/p>\n\n\n\n<p>Artiach, T. C., &amp; Clarkson, P. M<strong>.<\/strong>&nbsp;(2014). Conservatism, disclosure and the cost of equity capital.&nbsp;<em>Australian Journal of Management, 39<\/em>(2), 293\u2013314.<\/p>\n\n\n\n<p>Barth, M. E., Konchitchki, Y., &amp; Landsman, W. R.&nbsp;(2013). Cost of capital and earnings transparency.&nbsp;<em>Journal of Accounting and Economics, 55<\/em>(2\u20133), 206\u2013224.<\/p>\n\n\n\n<p>Ben-Nasr, H., &amp; Al-Dakheel, A. M.&nbsp;(2014). The impact of earnings quality on the cost of equity: Evidence from privatized firms.&nbsp;<em>International Journal of Financial Research, 6<\/em>(1), 68\u201381.<\/p>\n\n\n\n<p>Biddle, G. C., Ma, M. L. Z., &amp; Wu, F.&nbsp;(2015). Conditional conservatism and the cost of equity capital: Information precision and information asymmetry effects.&nbsp;<em>Applied Finance and Accounting, 2<\/em>(1), 1\u201319.<\/p>\n\n\n\n<p>Eliwa, Y., Haslam, J., &amp; Abraham, S.<strong>&nbsp;<\/strong>(2016). The association between earnings quality and the cost of equity capital: Evidence from the UK.&nbsp;<em>International Review of Financial Analysis, 48<\/em>, 125\u2013139.<\/p>\n\n\n\n<p>Francis, J., LaFond, R., Olsson, P. M., &amp; Schipper, K.<strong>&nbsp;<\/strong>(2004). Costs of equity and earnings attributes.&nbsp;<em>Accounting Review, 79<\/em>(4), 967\u20131010<\/p>\n\n\n\n<p>Garc\u00eda-Lara, J. M., Garc\u00eda-Osma, B., &amp; Penalva, F.&nbsp;(2011). Conditional conservatism and cost of capital.&nbsp;<em>Review of Accounting Studies, 16<\/em>(2), 247\u2013271<\/p>\n\n\n\n<p>Gray, P., Koh, P. S., &amp; Tong, Y. H.&nbsp;(2009). Accruals quality, information risk and cost of capital: Evidence from Australia.&nbsp;<em>Journal of Business Finance &amp; Accounting, 36<\/em>(1\u20132), 51\u201372.&nbsp;<\/p>\n\n\n\n<p>Indarti, M. G. K., Suryani, A., &amp; Mustikowati, R.&nbsp;(2019). Earning quality, information asymmetry and cost of equity capital in manufacturing companies.&nbsp;<em>Proceedings of the International Conference on Banking, Accounting, Management, and Economics (ICOBAME 2018)<\/em>, 34\u201342.&nbsp;<\/p>\n\n\n\n<p>Khalifa, M., Ben Othman, H., &amp; Kermiche, L.&nbsp;(2018). The effect of ex ante and ex post conservatism on the cost of equity capital: A quantile regression approach for MENA countries.&nbsp;<em>Research in International Business and Finance, 44<\/em>, 239\u2013255.&nbsp;<\/p>\n\n\n\n<p>Khalifa, M., Zouaoui, H., Ben Othman, H., &amp; Hussainey, K.<strong>&nbsp;<\/strong>(2019). Exploring the nonlinear effect of conditional conservatism on the cost of equity capital: Evidence from emerging markets.&nbsp;<em>Journal of International Accounting, Auditing and Taxation, 36<\/em>, Article 100272.&nbsp;<\/p>\n\n\n\n<p>McInnis, J.&nbsp;(2010). Earnings smoothness, average returns, and implied cost of equity capital.&nbsp;<em>The Accounting Review, 85<\/em>(1), 315\u2013341.&nbsp;<\/p>\n\n\n\n<p>Meini, Z., &amp; Siregar, S. V.&nbsp;(2014). The effect of accrual earnings management and real earnings management on earnings persistence and cost of equity.&nbsp;<em>Journal of Economics, Business, and Accountancy Ventura, 17<\/em>(2), 269\u2013282.&nbsp;<\/p>\n\n\n\n<p>Saleh, I., Arussi, S. S., &amp; Selamat, M. H.&nbsp;(2022). Earnings management, earnings quality, board gender diversity and cost of equity capital: Evidence from an emerging market.&nbsp;<em>Global Business Review<\/em>. Advance online publication.&nbsp;<a href=\"https:\/\/doi.org\/10.1177\/09721509221133513\" target=\"_blank\" rel=\"noopener\">https:\/\/doi.org\/10.1177\/09721509221133513<\/a><\/p>\n\n\n\n<p>Tazik, A., Rezaei, F., &amp; Jalali, R.&nbsp;(2019). The relationship between cost of equity and earning quality: Listed companies in TSE.&nbsp;<em>Journal of Management and Accounting Studies, 2<\/em>(2), 14 21.&nbsp;<a href=\"https:\/\/doi.org\/10.24200\/jmas.vol2iss02pp14-21\" target=\"_blank\" rel=\"noopener\">https:\/\/doi.org\/10.24200\/jmas.vol2iss02pp14-21<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Download PDF Authors Luper Iorpev 1, Justin Iorakpen Iorun 2 &amp; Michael Iorlaha 3 1 &amp; 2 Department of Accounting, Benue State University, Makurdi, Nigeria 3 Department of Accounting, Prime University Abuja, Nigeria michael.iorlaha@primeuniversity.edu.ng +234 9021366661 Abstract Research Objectives: This study examined the effect of earnings quality (EQ) on cost of equity (CoE) of listed oil and gas companies in Nigeria.&nbsp; Methodology: The study employed ex-post facto research design with secondary data drawn from audited financial statements and Nigerian Exchange [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":21742,"comment_status":"open","ping_status":"0","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[335,618,571],"tags":[],"class_list":["post-23105","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-grjaf","category-vol-5-issue-2","category-volume-5"],"_links":{"self":[{"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/posts\/23105","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/comments?post=23105"}],"version-history":[{"count":1,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/posts\/23105\/revisions"}],"predecessor-version":[{"id":23107,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/posts\/23105\/revisions\/23107"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/media\/21742"}],"wp:attachment":[{"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/media?parent=23105"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/categories?post=23105"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.amssr.org\/grjaf\/wp-json\/wp\/v2\/tags?post=23105"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}