Revenue Growth and Unusual Transactions as Accounting Red Flags: Evidence from Fraud Risk Detection (F-Score) Among Listed Financial Firms in Nigeria

Abstract

This study examines the effect of two accounting red flags (revenue growth and unusual transactions) on fraud risk detection, proxied by the F-Score, among listed financial firms in Nigeria, with a sectoral analysis of banking and non-banking institutions. The study adopted quantitative, causal, ex-post facto, panel research design anchored on an objective ontology, positivist epistemology, and value-neutral axiology. Secondary data were extracted from audited annual reports of a purposively sampled panel of 17 banking and 25 non-banking listed financial firms in Nigeria (42 firms) over 2014-2024. Descriptive statistics, correlation analysis, a full battery of diagnostic tests, and robust panel regression were employed. Unusual transactions exerted a positive and statistically significant effect on fraud risk detection in all three models: banking (β = 0.810, p = 0.000), non-banking (β = 0.502, p = 0.004), and overall (β = 0.779, p = 0.000), making it the single most consistent accounting red flag identified in the study. Revenue growth was positive and statistically significant in the non-banking (β = 0.988, p = 0.000) and overall (β = 1.002, p = 0.000) models but was negative and statistically insignificant in the banking model (β = -0.993, p = 0.518). The paper contributes sector-disaggregated, Fraud-Hexagon-grounded evidence on transaction-level and revenue-based red flags in an under-researched African financial market, offering regulators and forensic practitioners empirically ranked, actionable indicators for fraud surveillance in Nigeria’s banking and non-banking financial firms.