THE MODERATING EFFECT OF CORPORATE GOVERNANCE ON THE RELATIONSHIP BETWEEN MANAGEMENT ACCOUNTING AND FIRM PROFITABILITY

The conceptual framework of the study focused on the concepts of management accounting, firm profitability and corporate governance, as well as the relationships among these variables. Management accounting was examined as a strategic tool that provides internal financial information for planning, control and decision-making in organisations. Firm profitability was considered a key indicator of organisational performance reflecting the ability of firms to generate financial returns from operational activities. Corporate governance was viewed as the system of rules, structures and processes that ensure transparency, accountability and effective oversight within organisations. The framework further emphasised the relationship between management accounting practices and firm profitability, the influence of corporate governance on firm performance, and the moderating role of governance mechanisms in strengthening the effectiveness of accounting practices. This study examined the moderating effect of corporate governance on the relationship between management accounting and firm profitability. The motivation for the study emerged from the persistent challenges faced by organisations in translating management accounting practices into improved financial performance despite increasing adoption of modern accounting systems. Weak governance structures, poor monitoring mechanisms and ineffective utilisation of accounting information have been identified as factors that limit the contribution of management accounting to organisational profitability. The study therefore investigated how corporate governance strengthens the relationship between management accounting practices and firm profitability. The study adopted a survey research design using structured questionnaires administered electronically to employees of selected service organisations in Nigeria. A total of 241 valid responses were analysed using descriptive statistics and multiple regression analysis. The findings revealed that management accounting practices significantly influence firm profitability, while corporate governance enhances organisational accountability and strengthens the effectiveness of accounting systems.