The Long-Run Effects of Oil Revenue Dependence on Public Sector Accounting Quality and Fiscal Governance in Nigeria

This study investigates the long-run causal relationships among oil revenue dependence, public sector accounting quality, and fiscal governance outcomes in Nigeria, contributing to the resource curse literature from an accounting and public financial management perspective. The resource curse hypothesis posits that natural resource wealth can weaken institutional quality by reducing government accountability pressure and enabling patronage-based fiscal management. Nigeria's half-century of oil revenue dependence provides an extended time-series laboratory for examining whether oil windfalls have systematically deteriorated public accounting quality and fiscal governance. This study uses annual time series data from 1970 to 2023, combining oil revenue ratio data from the CBN Statistical Bulletin with novel measures of public sector accounting quality constructed from Auditor General reports, Accountant General financial statements, and International Budget Partnership Open Budget Survey data. Fiscal governance is assessed using expenditure efficiency ratios, budget implementation credibility indices, and audit query resolution rates. Autoregressive distributed lag cointegration, bounds testing, and asymmetric NARDL models are employed to capture non-linear effects of oil price cycles. Results establish a significant long-run negative relationship between oil revenue dependence and public sector accounting quality, with oil boom periods associated with particularly severe deterioration. The study contributes an original oil-accounting governance transmission mechanism model and recommends constitutional fiscal rules that mandate automatic IPSAS compliance audits as a condition of accessing federation account oil windfalls.

Keywords: oil revenue, public sector accounting, fiscal governance, Nigeria, resource curse.