Otalu, J. A
The study examined the prevalence of cash flow manipulations as a form of real activities manipulations in the quoted companies in Nigeria between 200 and 2010. The study makes use of 71 quoted companies in Nigeria and cash flow from operations model is specified as function of current sales and change in current sales. The residual of the estimated cash flow model is the abnormal cash flow which represents the proxy for real activities manipulations. The method of analysis adopted is the pool regression model. The estimated model shows that both sales and current sales levels of the firms are very important determining factor of cash flow and hence the low levels of abnormal cash flow which signifies prevalence of real activities manipulations in among the quoted companies in Nigeria. It is therefore recommended that relevant bodies like the audit committee will have to pay more attention to the cash flow process of these quoted firms since the study has shown that cash flow from operations of these firms are highly subjected to manipulations.
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