This study investigates theimpact of behavioural biases on financial reporting quality (FRQ) among listed firms in Nigeria over the period 2011–2025. Using an unbalanced panel dataset of 148 firms drawn from the Nigerian Exchange Group (NGX), the study employs pooled ordinary least squares (OLS), fixed effects models (FEM), random effects models (REM), and the system generalised method of moments (Sys-GMM) estimator to account for endogeneity, heteroscedasticity, and serial correlation. The Modified Jones Model is adopted to compute the absolute value of discretionary accruals as a proxy for FRQ, while optimism bias, overconfidence, heuristic bias, and loss aversion constitute the behavioural bias constructs. Control variables include firm size, leverage, profitability, board composition, audit committee characteristics, ownership structure, regulatory oversight, IFRS compliance, market volatility, and industry norms. Results reveal that all four behavioural bias constructs exert a statistically significant and negative influence on FRQ, with overconfidence and optimism bias displaying the most pronounced effects. Governance mechanisms, particularly board independence, audit committee financial expertise, and institutional ownership, significantly moderate the bias–quality nexus. The findings survive a battery of post-estimation diagnostics and are robust across multiple model specifications. The study contributes to the nascent but growing interface of behavioural finance and financial reporting research in sub-Saharan Africa and carries important implications for regulators, auditors, investors, and corporate governance reformers.
Onipe Adabenege Yahaya (Mon,) studied this question.