Determinants of Corporate Failures in Nigeria: Preparers and Users Perspective

Abstract

This study seeks to examine the factors responsible for corporate failure in Nigeria. The study adopted a survey research design, data were drawn from primary sources. The population of the study consisted of all preparers and users of financial reports made up of external auditors, company management, tax administrators and investors in Delta and Rivers states, Nigeria. Using convenience and simple random sampling techniques, a total of 194 respondents were administered questionnaire in the area of study. The data from the instruments were analyzed using the one-way analysis of variance (ANOVA) at 0.05 level of significance. The findings revealed that most corporate failure are due to management inefficiency, weak corporate governance and auditors’ negligence and incompetence. The study further revealed that most accounting reports do not show signals to corporate failure. It recommends amongst others that auditors should devote a special section of the annual reports of companies to explore the going concern position of the companies audited so as to enable stakeholders make informed decisions on audited reports.