EXECUTIVE COMPENSATION AND FINANCIAL REPORTING QUALITY IN THE AGRICULTURE SECTOR

This study examined the effect of executive compensation on the financial reporting quality of agricultural companies listed on the Nigerian Exchange Group (NGX), with firm size serving as a control variable. The research utilized panel least squares regression and was based on secondary data collected from five agricultural firms between 2019 and 2023. Discretionary accruals were used to proxy financial reporting quality, while executive compensation and the interaction between firm size and compensation were the key explanatory variables.  Regression results showed that executive compensation had a statistically significant positive effect on financial reporting quality (β = 22.83, p = 0.0106), suggesting that higher compensation is associated with reduced earnings manipulation. Conversely, the interaction between firm size and executive compensation was negatively significant (β = -2.62, p = 0.0090), indicating that the positive influence of executive compensation on reporting quality diminishes as firm size increases. In conclusion, the study found that effective executive compensation structures enhance financial reporting quality, particularly in smaller agricultural firms. These findings have important implications for corporate governance practices, encouraging policy reforms that align executive incentives with transparency and accountability in financial reporting.