Business Efficiency and Earnings Quality of Commercial Banks in Nigeria (original) (raw)
Related papers
Impact of Profitability on Earnings Quality of quoted Deposit Money Banks (DMBs) in Nigeria
YUSUF, Hyeluwa, 2021
The study examined the Impact of Profitability on Earnings Quality of Deposit Money Banks in Nigeria. The data used for this study were sourced from CBN statistical bulletin, and development indicators.The population consists of 14 deposit money banks quoted on the Nigerian stock exchange from the period of 2006 to 2019. The paper used purposeful sample to arrive at 12 deposit money banks used for the study. Loan loss provision (LLP) was used a proxy for earnings quality while return on asset (ROA) was used as a proxy for profitabilityby means of Ex-post factor research design, preestimation tests were carried out on each of the variables using Augmented Dickey Fuller (ADF) unit root test to avoid spurious regression results, Hausman test fixed and random effect was estimated to choose which model fits. The study employed random linear ordinary least square pooled OLS for which was analyzed via E-views 10. The findings from the study revealed there is a significant relationship between return on asset and loan loss provision of deposit money banks (DMBs) in Nigeria. It conclude that profitability boost earnings quality of deposit money banks (DMBs) because when banks makes more profit it increase the volume of earnings in general. It therefore recommended that proper and adequate measures should be put in place for the evaluation, examination and oversee of statement of DMBs.
This study aims at investigating the quality of accounting information in Nigerian Banks and its relationship with some attributes (performance, leverage, bank size and audit size). It purposes to find some determinants of accounting quality (AQ) considering the most cited theory in this regard, agency theory, in order to test if this theory is supported in Nigeria. The sample of the study consists of 14 banks listed on the Nigerian Stock Exchange (NSE). This study also does a longitudinal analysis with the aim of assessing the trend of AQ in Nigeria over a five-year period (2011-2015). To test the association between the level of AQ (measured using non-discretionary accruals) and some bank's attributes, we used data for panel regression analysis. Results of the regression analysis indicate that performance, bank size and audit size are significantly related to accounting quality, while leverage is found to be statistically insignificant with accounting quality, this study also ...
Asian Journal of Accounting Research
PurposeThe purpose of the study is to determine the relationship between bank efficiency in terms of corporate governance guidelines and the extent of practice of earnings management (EM).Design/methodology/approachArchival data of listed private commercial banks of Dhaka Stock Exchange over the period of 2007–2016 relating to corporate governance and earnings management are collected and analyzed using parametric and non-parametric methods (efficiency analysis) and applying panel regression analysis.FindingsThe same distribution pattern and have low degree of the correlation (0.248) among them. It is found that private commercial banks of Bangladesh, on average, display efficiency level of 80.84%. The average value of discretionary loan loss provision (i.e. measure of earnings management) is 0.4249 and this indicates the presence of earnings management. The relation between earnings management and efficiency score in both cases of two-step system generalized methods of moments (GMM...
Firms Attributes On Earnings Management Of Listed Deposit Money Banks In Nigeria
This study assesses the effects of firms' attributes on earnings management of listed Deposit Money Banks in Nigeria. To achieve the objectives of this study, all the listed money deposit banks in the Nigerian stock exchange for the period 2015-2019 were used for the study. The study adopted the use of both descriptive statistics and correlation matrix using the robust fixed regression for the listed sampled firms. The hypotheses were tested and findings of the study revealed that board meetings and audit committee type have no significant positive effect on earnings management with P-value of 0.701 and 0.264 respectively. Thus, the study concluded that the variables utilized in the study do not necessarily influence a firm's tendency to engage in the manipulation earnings and exaggerate earnings. The study therefore recommends that regulatory agencies such as SEC should ensure that banks comply with stipulated rules for better monitoring and governance.
International Research Journal of Management and Commerce (IRJMC) ISSN (2348-9766), 2016
This study examines the relevance of earnings management strategies on the financial performance of listed deposit money banks in Nigeria. Data was extracted from the annual report and accounts of 5 sampled banks for the period 2013-2017. Loan loss provision was used as a proxy for earnings management while return on assets (ROA) was used as proxy for banks performance. The study employed linear regression of pooled ordinary lease square for data analysis. Findings from the study revealed that earnings management exist in the Nigerian Money Deposit Banks. However, the study could not establish any statistical significant impact of earnings management on ROA. It is therefore, recommended that even though the relationship between the variables are not significant, proper and adequate measures should be put in place for the evaluation, examination and scrutinization of financial statement of DMBs.
The impact of Earnings Management on Financial Performance of Listed Deposit Money Banks in Nigeria
2017
This study examines the impact of earnings management on the financial performance of listed deposit money banks in Nigeria. Data was extracted from the annual report and accounts of 5 sampled banks for the period 2011-2015. Loan loss provision was used as a proxy for earnings management while return on assets (ROA) was used as proxy for banks performance. The study employed linear regression of pooled ordinary lease square for data analysis. Findings from the study revealed that earnings management exist in the Nigerian Money Deposit Banks. However, the study could not establish any statistical significant impact of earnings management on ROA. It is therefore, recommended that even though the relationship between the variables are not significant, proper and adequate measures should be put in place for the evaluation, examination and scrutinization of financial statement of DMBs.
The effect of earnings management on bank efficiency
Asian Journal of Accounting and Governance, 2018
A study on the effects of earnings management practices on bank cost efficiency, using banking data in five ASEAN countries, was conducted in 1989-2015. The Stochastic Frontier Analysis technique employed to gauge cost efficiency revealed that each country has different efficiency level. With panel data analysis, we further discovered that increase in earnings management practices reduces bank's efficiency significantly. It is suggested that banking supervisors and managers should formulate strategies that focus on cost efficiency-related initiatives and regulate earnings management practices. Such strategies could potentially facilitate the economic integration of ASEAN countries.
Journal of Management Information and Decision Sciences, 2021
Measurement of financial institutions performance has been done with the use of certain Key Performance Indicators (KPIs) such as liquidity ratio, profitability ratio, asset quality of the bank, capital adequacy amongst others. The study therefore, adopted a two-stage methodological approach (non-parametric and regression analysis) with the help of Microsoft excel solver and E-Views to analyze the efficiency and performance of eleven (11) listed deposit money banks. The study made use of three (3) inputs (total deposit, total asset, and operating expenses) and three (3) outputs (net interest income, loans and advances, and gross earnings) for the deposit money banks. From the data envelopment analysis, the study found that Eco Bank, Access Bank, First City Monument Bank, Fidelity Bank, Guarantee Trust Bank, Sterling Bank, Unity Bank, Wema Bank, were efficient at all envelopment models. At the same time, United Bank for Africa, Zenith Bank and Union Bank were not fully efficient at all envelopment models despite their profitability. From the profitability model, the study found that industry-specific variables were positive and statistically significant at 0.005 level of significance. The study concludes that big or large financial disclosures accrued to financial institutions does not secure its improved efficiency level which could metamorphose into financial stability. The result of this study has made it clear that efficiency is a better measure of performance than profitability as some deposit money banks were not efficient, but profitable, also a huge total asset is not directly proportional to an efficient financial institution; therefore, management of banks should introduce effective and cost efficient strategies as part of their strategic decisions.
The influence of earnings management on bank efficiency: the case of frontier markets
Heliyon, 2021
Frontier market banks fill key funding gaps in the markets they serve, resulting in increased evaluation (a positive) and earnings management (EM) (a negative). Examination of a large sample of banks in 22 frontier market countries from 2001 to 2018 reveals a downward trend in efficiency, indicating that loan quality issues persist despite increasing economic growth in the respective countries. Using stochastic frontier analysis to quantify efficiency and random effects and truncated regression to investigate the EM-efficiency relation, this study demonstrates that efficiency is negatively associated with EM. Furthermore, there was no clear relationship between bank size and efficiency, which counters economic efficiency theory and implies that frontier market banks absorb higher non-performing loan costs. The findings herein support prospect theory by demonstrating that managers engage in risk-seeking behaviour while making risk-averse decisions. Overall, the study's implications suggest that banks employ alternative loan provision practices to optimise resource allocation and, by extension, performance.
Financial Reporting Quality and Financial Performance of Quoted Banks in Nigeria
Research Journal of Finance and Accounting, 2019
The study examined the effect of financial reporting quality on financial performance of quoted banks in Nigeria using secondary data obtained from Nigeria stock exchange spanning from 2007 to 2016. Relevance of accounting information (measured by earnings and book value of equity predictive ability-EBVEP) and timeliness of accounting information (measured by audit report lag-ARL) were subjected to Hausman test and also regressed against performance variable: Price to earnings ratio-PER, Earnings yield-ENY and Dividend yield-DVY. Findings indicate a significant positive effect of EBVEP on PER and significant negative effects on ENY and DVY implying that an increase in EBVEP increases PER but decreases ENY and DVY. Similarly, a positive significant effect of ARL is found on PER and DVY but with a negative insignificant effect on ENY, implying that an increase in ARL increases PER and DVY but decreases ENY. The study therefore confirms that accounting information is value relevant and could be used for evaluation of accounting standards as well as for the investigation of the economic consequences of new accounting standards on the performance of quoted banks in Nigeria. We recommend that policy makers such as SEC, CBN, and FRCN should look into the audit report lag of quoted financial institutions in Nigeria and formulate policies to enforce compliance with the stipulated reporting requirements. This will assist in restoring investors' confidence in financial reporting.