EFFECT OF OWNERSHIP STRUCTURE ON EARNINGS MANAGEMENT OF LISTED MANUFACTURING COMPANIES IN SUB-SAHARAN AFRICA

Abstract

Earnings management remains a pervasive issue threatening the credibility of financial reporting, particularly in emerging economies such as those in Sub-Saharan Africa. The role of ownership structure in mitigating or enabling such practices has attracted scholarly attention, yet findings remain inconclusive and often geographically limited. This study investigates the effect of ownership structure on real earnings management by listed manufacturing companies in Sub-Saharan Africa, focusing on five key dimensions such as institutional ownership, managerial ownership, ownership concentration, foreign ownership, and government ownership. The study employed a quantitative research design, using panel data from selected manufacturing firms across multiple Sub-Saharan African countries between 2014 and 2023. Real earnings management was measured using standard models of abnormal operational activities, while ownership variables were captured as percentage holdings. Statistical techniques included descriptive analysis, correlation matrix, multicollinearity checks (VIF), fixed and random effects regression, and the Hausman specification test. Findings revealed that institutional, foreign, and government ownership had statistically significant effects on real earnings management. Specifically, institutional ownership positively influenced earnings management, while foreign and government ownership were negatively associated with it, implying improved financial reporting quality. However, managerial ownership and ownership concentration showed no significant impact. The study recommends strengthening institutional investor monitoring, increasing foreign investment participation, and enhancing government oversight in manufacturing firms. These strategies, alongside robust governance frameworks, could substantially improve corporate transparency and financial accountability in the Sub-Saharan African manufacturing sector.