Effect of relational capital on the financial reporting quality of listed industrial goods companies in Nigeria

Abstract

The study examined the effect of relational capital on the financial reporting quality of listed industrial goods companies in Nigeria. The study adopted an ex-post facto research design, and the population comprised thirteen (13) listed industrial goods companies in Nigeria. A census sampling technique was used to include all firms in the sector. Secondary data were obtained from the annual reports and financial statements of the sampled companies covering the period 2015 to 2024. Panel regression analysis was employed to examine the relationship between relational capital variables and financial reporting quality. The findings revealed that Trade and Other Receivables had a positive but statistically insignificant effect on financial reporting quality, indicating that receivable disclosures alone do not significantly influence reporting credibility. Trade and Other Payables showed a positive and statistically significant effect, suggesting that transparent disclosure of supplier and creditor obligations improves financial reporting quality. Cash Receipt from Customers exhibited a negative and significant relationship with financial reporting quality, implying possible aggressive revenue recognition or inconsistent cash flow disclosure practices. Conversely, Cash Payment to Suppliers showed a positive and significant effect, indicating that accurate reporting of operational cash outflows enhances reporting transparency. The study concludes that relational capital significantly influences financial reporting quality, particularly through liability and payment disclosure structures. The study recommends improved relational capital management, enhanced disclosure standards, and strengthened accounting information systems to promote transparency in Nigerian industrial goods firms.