THE IMPACT OF CORPORATE FINANCIAL SCANDAL ON FIRMS PROFITABILITY (A CASE STUDY OF CADBURY NIGERIA PLC)

TABLE OF CONTENT

Title page

Certification

Dedication

Acknowledgement

Abstract

CHAPTER ONE:

INTRODUCTION

1, 0      Introduction

• Statement of problems
• Research objectives
• Research question
• Research hypothesis
• Significance of the study
• Scope and limitation of study
• Historical background of study
• Definition of terms

CHAPTER TWO:

LITERATURE REVIEW

2.1       Introduction

2.2.1   Definition of financial statement of fraud

2.2      Types of financial statement fraud sheme

2.2.1   Fictitious revenue

2.2.2   Timing Difference

2.2.3   Improper assets valuation

2.2.4   Concealed liabilities and expences

2.2.5   Improper and / or ineadequate disclosure

2.3      Indicator to financial statement scandal/fraud

2.4      Tools to detect fraudulent financial statement the financial statement Analysis.

2.4.1     Vertical analysis

2.4.2     Horizontal analysis

2.4.3     Ratios

2.4.3.1 Sales growth index (S G I)

2.4.3.2 Gross marginal index (G M I)

2.4.3.3 Asset Quality Index (A Q I )

2.4.3.4 Days Sales Receivable Index (D S R I )

2.4.3.5 Sales, General and Administrative Expenses Index

2.5        Ratio analysis and financial statement

2.6        Significance of ratio analysis

2.7        Limitations of ratio analysis

2.8        Classifications of ratio

CHAPTER THREE:

RESEARCH METHODOLOGY

3.1     Introduction

3.2     Research Design

3.3     Research population/sampling

3.4     Sample size

3.5     Sampling techniques

3.6     Sources of data collection

3.6.1 Primary source

3.6.2 Secondary source

3.7     Data analysis techniques

3.8     Constraints in data collection

CHAPTER FOUR:

DATA ANALYSIS AND INTERPRETATION

4.1      Introduction

4.2      Respondents characteristics and classification

4.3      Data presentation and analysis

4.3.1   Analysis of respondents Bio-data

4.3.2   Analysis of Individual statement

4.4      Testing of hypothesis

CHAPTER FIVE:

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1      Summary of findings

5.2      Conclusion

5.3      Recommendation

CHAPTER ONE

1.0     INTRODUCTION

Thus, this study is intended to examine the effects of financial misstatement or scandals on firm‘s profitability. The study will also cover the control and precautions to financial scandal. The study also examine how best to handle scandals to ensure efficiency and effectiveness of firms.

The practice of manipulating the financial statement to bolster company’s position is not new

According to the Association of Certified Fraud Examiners (ACFE) fraud is the deliberate misrepresentation of the financial position of an enterprise, accomplished through the intentional misstatement or omission of amounts or disclosures in the financial statement to deceive financial statement users. Also, financial scandals are fraud called misrepresentation of facts, and its key elements are: –

1. A material false statement
2. Knowledge of its falsity

iii       Reliance on the false statement by the victim, and

iv       Damage suffered by victim

Financial scandals meet the above criteria. The financial scandal is false because of the degree of manipulation to present a ‘picture’ that is grossly different from the truth. Those behind it, the top management know it is false, but want users (banks investors, public) to rely on it, and there is high risk of financial loss to those who invest in money losing ventures

• STATEMENT OF PROBLEM

The major problem of financial scandals is its adverse effect on the firm’s profitability and the detriments it holds on the firm’s reputation.

However, this is evident in the findings carried out on First Bank Nigeria Plc and its directors in the financial decisions of the firm’s financial misstatement carried out by the Securities and Exchange Commission (SEC).

• RESEARCH OBJECTIVES

The main objectives of this proposed research shall be:

1. To examine the effects of corporate financial statement fraud on firm’s profitability.
2. To identify reason(s) why such falsification is largely perpetrated by management
3. To examine how perpetrated scandals are designed to benefit the organization
4. To find out how financial fraud affects the organization generally.
   • RESEARCH QUESTIONS

For the purpose of this research work, the following research questions will be dealt with.

1        Is there any significant relationship between financial scandals and firm’s profitability?

2. Has the falsification of financial statement improved the volume of investors?
3. is there any significant relationship between financial scandals and investor’s turnover?
4. Are financial scandals aided by the management to the firm’s benefits?

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