Moderating Effects of Profitability on The Relationship between ESG Reporting and ‎Earnings Quality in African Manufacturing Firms

  • Authors

    • Israel S. Akinadewo Department of Accounting, University of Ilesa, Ilesa, Osun State, Nigeria
    • Jeremiah O. Akinadewo Department of Accounting, Afe Babalola University, Ado-Ekiti, Ekiti State, Nigeria
    • Elijah O. Akinadewo Department of Accounting, Afe Babalola University, Ado-Ekiti, Nigeria
    https://doi.org/10.14419/3r5fpq96

    Received date: November 25, 2025

    Accepted date: December 14, 2025

    Published date: December 19, 2025

  • Earnings Quality; ESG Reporting; Return on Assets; Return on Equity; Manufacturing Firms

  • Abstract

    This study examines the impact of Environmental, Social and Governance (ESG) reporting on ‎earnings quality of African listed manufacturing firms while adopting profitability, proxied by ‎Return on Assets (ROA) and Return on Equity (ROE), as a moderating variable. Adopting an ex ‎post facto research design and panel data of 49 firms over the period 2012-2023, the study ‎applies fixed-effects regression with robust standard errors to account for firm-specific ‎heterogeneity. It is found that the effect of ESG reporting on earnings quality is not uniform for the ‎three proxies: JMAQ, MJEQ, and DAEQ. Environmental reporting strengthens accruals ‎magnitude-based JMAQ, but weakens accrual-based MJEQ and DAEQ, emphasizing differences ‎between substantive and symbolic disclosure. The social and governance disclosures also have ‎mixed results, suggesting that the quality of disclosure is related to the genuineness of the practice ‎behind it. ROA exerts a positive impact on the quality of earnings in the ESG-earnings quality ‎relation in all firms, which implies that financially strong firms have greater potential to turn their ‎ESG engagements into believable reporting. On the other hand, ROE exhibits weaker and ‎inconsistent interaction effects. The study indicates the central importance of profitability in ‎determining whether ESG reporting will strengthen or weaken earnings quality for African ‎manufacturing firms and suggests that stronger governance monitoring, the convergence of ESG ‎disclosure standards, and the introduction of mandatory assurance regimes should be incorporated ‎moving forward to support credible sustainability reporting.

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  • How to Cite

    Akinadewo, I. S. ., Akinadewo , J. O. ., & Akinadewo, E. O. . (2025). Moderating Effects of Profitability on The Relationship between ESG Reporting and ‎Earnings Quality in African Manufacturing Firms. International Journal of Accounting and Economics Studies, 12(8), 648-658. https://doi.org/10.14419/3r5fpq96