Sustainability Reporting Compliance and Financial Performance of Companies Listed On the Nigeria Stock Exchange (Published)

Citation: Lawrence, M. (2022) ‘sustainability reporting and financial performance of companies listed in the Nigeria Stock Exchange’, European Journal of Accounting, Auditing and Finance Research, Vol.10, No. 5, pp.25-73

Sustainability reporting is currently a contemporary issue in accounting studies. This study examines the impact of sustainability reporting compliance on the financial performance of listed firms in Nigeria. Secondary data was collected from annual reports of a sample of fifty seven companies listed on the Nigerian Stock Exchange. Simple disclosure index was used to score sustainability reporting Compliance using Economic (ECM), Environmental (EVM) Social (SOC) and Governance (GOV) disclosures in the annual reports of the sampled firms based on Nigeria Stock Exchange (NSE) Sustainability Reporting Guideline. The firms’ financial performance was evaluated based on Net Profit Margin (NPM) and Return on Capital Employed (ROCE). Using least square panel data analysis, the results show that listed companies in Nigeria have significantly complied with the sustainability disclosure guideline. The aggregate average sustainability Reporting Compliance (SRC) by all the firms examined was 75%. It was also found that there is a significant association between sustainability Reporting Compliance and Net Profit Margin (NPM) as well as Return on Capital Employed (ROCE). It is recommended that companies, both local and international should adopt sustainability in their day-to-day policies to be legitimate in their daily activities on the planet and also enjoy better financial performance. There should also be legislative backing for sustainability reporting compliance to enable companies comply and there is need for uniformity in sustainability framework since the subject is an evolving one.

Keywords: Financial Performance, sustainability guidelines, sustainability reporting

Long Term Debt Financing and Firm Financial Performance in Nigerian Listed Firms (Published)

Citation: Meshack,  I., Owa F., Nwadialor, E., Chiedu C. O. (2022)  Long Term Debt Financing and Firm Financial Performance in Nigerian Listed Firms, European Journal of Accounting, Auditing and Finance Research, Vol.10, No. 4, pp.52-62

The study examines long term debt financing and financial performance of listed manufacturing firms in Nigeria. This study employed an ex-post facto research design. The sample used for the research consists of 75 non-financial firms listed on the Nigerian Exchange Group. The time period covering is from 2010-2019. The panel regression is employed for the inferential analysis. On the overall, the study finding reveals that LTDE has significant positive impact on ROE but insignificant in relation to TOBINQ while LTDA has a significant negative impact on ROE as well as with Tobin q. The study recommends the need for firms to engaged long term debt productively and reduce the agency cost that accompanies debt financing such as the opportunity for managerial opportunism and inefficient use of debts due to their long maturity characteristic.

 

Keywords: Financial Performance, Long Term debt, Panel regression

Transparency Index as a Preface to Support Financial Reports Transparency and to Increase Shareholder Protection Level (Published)

Purpose: The study aims to display negative effects on users of financial reports because of the lack of level of financial reports transparency, which makes it imperative to support the level of transparency of financial reports through organizing Voluntary disclosure using a proposed Transparency Index in order to meet the needs of financial reports users from information. The study also deals with trying to determine the nature of relationship between the level of transparency of the financial report and the financial performance and the level of shareholder protection in the Egyptian Exchange.Methodology: To verify the validity of the study hypotheses, the we conducted the Experimental Study through applying it to the Egyptian Exchange Index companies EGX50 after excluding the Financial Institutions through examining the financial statements, the attached Notes, the Board of Directors report, the governance report and the sustainability report for the EGX50 index companies for a period of three years 2016, 2017, 2018.Practical Results: The study sample presented in the forty-one companies listed in the Egyptian Exchange EGX50 index after excluding financial institutions from the index’s companies. The Experimental Study examined the financial statements, the attached Notes, the Board of Directors report, the governance report and the sustainability report for a period of three years 2016, 2017, 2018. After examination it was found that the average level of the Transparency Index in the financial reports for the whole years of study reaches 62.2%, which is a low rate indicating that the EGX50 index’s companies represent low transparency companies. In addition, it was found that the average level of the shareholder protection index in the EGX50 index companies reaches 58%. The foregoing confirms the need to support both the level of transparency and the level of shareholder protection through the application of the proposed Transparency Index. it has been concluded that the Transparency Index has a meaningful impact on both Tobin’s Q (financial performance) (the relationship between them is positive) and also on the stockholders’ protection Index (SPI) (the relationship between them is positive). Authenticity/ Value: The study deals with one of the most important study issues related to measure transparency level of financial reports in the Egyptian Exchange and determines the impact of supporting transparency level on financial performance as well as on supporting protection level of shareholders, The research also extends to suggest transparency index that allows providing most of information needs of users of financial reports according to the aforementioned. In many studies, the importance of research becomes evident In the context of the limited accounting research related to assessing the level of transparency of financial reports at Egyptian Exchange and indicating the positive effects on both the financial performance and the levels of shareholder protection resulting from supporting the level of transparency of financial reports, this is what the authors believe can represent a contribution to the debate about levels of transparency and shareholder protection in the Egyptian Exchange.

Keywords: Financial Performance, Transparency, Voluntary Disclosure, stockholders’ protection., transparency index

Income Smoothing and Financial Performance of Tier 11 Commercial Banks in Kenya (Published)

The most commonly used Income smoothing practices are attributed to bad corporate governance. Bank managers and bank accountants use strategies that seek to erode profit mechanisms that amount to severe consequences for the entire banking and finance industry. Therefore the purpose of this study was to determine the effect of income smoothing practices on financial performance of Tier II commercial banks in Kenya. The study was based on information theory, agency theory and positive accounting theory. This study adopted an exploratory research design in explaining the relationship between the independent and dependent variables. The target population for the study included10 CBK licensed tier II commercial banks in Kenya where 40 respondents were included:  purposive sampling technique was used to select Finance managers, internal auditors and accountants. The researcher obtained sample from all the 10 tier II commercial banks in their head offices in Nairobi, Kenya. Primary data was collected using a structured Questionnaire while complimentary data was collected from published financial statements from CBK Supervisory reports. The data was analyzed using the Statistical Package for Social Sciences (SPSS) version 20, by use of both descriptive and inferential statistics. The study results revealed that Income Smoothing had an insignificant coefficient of 0.296 with the Financial Performance of tier II commercial banks in Kenya.. According to the findings, exclusion of liabilities activities are the source of funds for the banks. Based on these findings, the study recommended that watchdogs of the accounting practices need to exercise strict oversight on the extent to which Commercial bank adopt income smoothing issues. The study findings would form a timely and solid foundation that the banking industry pundits and policy makers would base most of their policy priorities in responding to the volatile accounting situation in Kenya today. 

Keywords: Financial Performance, Income Smoothing, Kenya, tier ii commercial banks

Effect of Inventory Management on Financial Performance: Evidence From the Saudi Manufacturing Company: Case Study (Published)

During this recent period of time, the world has witnessed a severe financial crisis that has affected many international companies and economies that had planned their production rates on the basis of marketing forecasts that were prepared just before the global crisis. This study explores the relationship between inventory control and the financial performance of a particular company through the use of a case study approach. It also examines factors that draw back the process of inventory control. The results showed that the profitability of a company has a significant relationship with inventory management, and this suggests that if the management of inventory is done effectively, it ensures more profitability, while poor management translates to a poor financial performance.

Keywords: Financial Performance, Inventory Management, manufacturing company

Board Diversity as Moderator on Firm Characteristics and Financial Performance of Listed Conglomerate Companies in Nigeria (Published)

Financial performance of companies has attracted a lot of attention globally from financial experts and management of firms as a result of 2008 global financial crisis and the failure of major companies.  Prior studies on the effect of firm characteristics on financial performance have reported mixed and contradictory results suggesting the existence of certain factors that have not been factored in modeling the relationship. It is against this backdrop that this study examined the effects of firm characteristics on financial performance of listed conglomerate firms in Nigeria in the presence of board diversity. The population of the study consists of six (6) listed conglomerate firms in Nigeria as at 31st December 2017. The six (6) firms were selected to form the sample of the study for the period of eleven years (2007-2017). The census sampling technique was adopted for the study. Secondary data was extracted from the annual report and accounts of the sampled companies A multiple regression analysis was used to test the null hypotheses of the study. The Hausman test indicated random effect model as the appropriate model for the study. The results of study show that leverage has negative and significant effect on return on asset, while firm size and operating expense revealed an insignificant positive effect on return on asset. The sales growth shows a negative and insignificant effect on the return on asset. For model two, it also documented that foreign director positively and significantly moderates the relationship between leverage and sales growth to financial performance of the listed conglomerate firms in Nigeria. It is recommended among others that the management of conglomerate firms in Nigeria should make it mandatory to have an average of 32% of their board members as foreign directors. Also reduce their debt structure to avoid high cost of operation

Keywords: Financial Performance, Nigeria, board diversity, conglomerate companies, firm characteristics

Credit Risk and Financial performance: An empirical study of deposit money banks in Nigeria (Published)

Money deposit banks’ ability to mitigate credit risks has been a contemporary and controversial debate in literature, in contributing and extending the frontiers, this study examined the effect of credit risk on financial performance of money deposit banks in Nigeria. The study adopted an expo facto research design, descriptive and using inferential statistics to analyse the data. The population consisted of all the 19 money deposits banks (MDB) listed on the Nigeria stock exchange as at 31^st December, 2018. A sample of 13 MDB were chosen on purpose, based mainly on availability of complete data within the study period under consideration. The study covered 169 firm-year observations for the period of 2006-2018. The study extracted secondary data from the financial statements of the banks explored for the study. The study identified three variables of financial performance (dependent variable) surrogated with return on capital employed (ROCE), the independent variable of credit risk proxied with non-performing loans, capital adequacy ratio, loan loss provisions loan to deposit ratio and the control variables of bank Size. The study found that credit management  had a positive significant effect on financial performance of the MDB.(Ad R²=0.028,F(_4,4170) =2.26;P-value <0.05)When the control variable of bank size (BSZ), stronger effect was exhibited, the study found that credit risk with bank size had a stronger significant effect on financial performance of MDB in Nigeria(Ad.R²=0.4311,F_(4,4170)=321.95;p-value<0.05). The study concluded that credit management influences the financial performance of Deposit Money Banks in Nigeria. The study recommended that management of the MBD should design and maintain a robust credit management strategy and framework as well as stringent credit policy that would decrease non-performing loan and default level; and improve their performance level in Nigeria.

Keywords: Credit risk, Financial Performance, capital employed, dividend, money deposit banks, nonperforming loans

Ownership Structure, Bank Stability and the Financial Performance of Commercial Banks in South Sudan (Published)

Since independence in 2011 the Republic of South Sudan has witnessed growth in the financial systems and the overall economy. This has led to growth in the number of the financial institutions in the country. Central to this growth pattern are commercial banks both domestic and foreign-owned. However despite their presence within the country for the last half-decade there has been scant literature examining their stability in the face of the numerous internal factors and economic shocks. Hence the current research sought to determine the effect of ownership structure, bank stability and the financial performance of commercial banks in South Sudan. The study was primarily grounded on the CAMEL model and theory of the firm. The study further adopted the positivism philosophy which guided the research. The research employed a descriptive research design. The population for the study was all the 29 commercial banks in south Sudan from which the research targeted one senior manager. The research relied on a mixed methodology which encompassed both quantitative and qualitative data. Secondary data was collected for the period 2012-2017 from audited annual financial reports of individual banks and from the Central Bank of South Sudan reports while primary data was collected by use of a semi-structured questionnaire. The collected data was edited, sorted and coded into SPSS 23 for subsequent data analysis using SPSS 23 statistical analysis tool. The research utilized both descriptive and inferential statistical methods in the analysis. The statistical tests to be utilized in the study included t-tests, f-test, regression models and ANOVA models. The findings of the research were presented using frequencies, percentages, means, standard deviation, correlation coefficients, charts, tables and other statistical measures. The results of the study indicated there was a statistically significant moderating effect of ownership structure on the financial performance of commercial banks in South Sudan. The study recommends that the government should adopt better measures to safeguard public owned commercial banks to improve their efficiency and performance.

Keywords: Financial Performance, Foreign ownership, joint venture, private-local ownership, public ownership

Faithful Representation of Accounting Information and Financial Performance of Quoted Banks in Nigeria (Published)

The study examined faithful representation of accounting information and financial performance of quoted banks in Nigeria using secondary data obtained from Nigeria stock exchange spanning from 2007 to 2016. Price to earnings ratio- PER and Earnings yield-ENY were selected as financial performance proxies while absolute discretionary accruals (ABSDA) was used as a measure of faithful representation of accounting information. ABSDA was subjected to Hausman test and also regressed against performance variable. Findings indicate that ABSDA is negatively correlated with PER but positively correlated with ENY. The study also confirmed a significant negative effect of ABSDA on PER and ENY implying that the more intense the practice of accounting information manipulation through the use of absolute discretionary accruals is, the greater the adverse effects on price earnings ratio and earnings yield. This is because it introduces bias which hurts the neutrality of accounting information (SFAC 8, 2010). We recommend that regulators should increase scrutiny or constraints over accounting discretion and flexibilities allowed by accounting standard to curtail distortions by financial statement preparers in order to eliminate earnings manipulation and achieve high level of faithful representation.

Keywords: Accounting Information Quality, Earnings yield, Faithful representation, Financial Performance, Nigerian Banks, Price/ earnings ratio

The Influence of Mergers and Acquisitions on Financial Performance and Stock Return of Indonesian Banks (Published)

Business environment has changed rapidly due to dynamic changes in the current global era. Merger and acquisition activities are not a new phenomenon in the business world, and it’s an important business phenomenon. One of the changes that can be seen from the merger and acquisition activities are company’s financial performance and stock return. The purpose of this study is to analyze banks financial performance with financial ratios before and after mergers and acquisitions, analyze the effect of mergers and acquisitions on bank financial performance and analyze the factors that influence the success of mergers and acquisitions. This research used Kolmogorov-Smirnov normality test and Wilcoxon test and logistic regression. The results showed that ROA, OER, NPL, NIM and LDR improved after mergers and acquisitions. Mergers and acquisitions also affect the differences in ROA, OER, NPL, NIM, and LDR before and after mergers and acquisitions. Factors that affect the success of mergers and acquisitions are foreign ownership, acquisition percentage and firm size when viewed the success of merger and acquisition from bank’s ability to increase its net profit. In addition, when viewed from the stock returns obtained factors that affect the success of a merger and acquisition are foreign ownership, the percentage of acquisitions and industry relatedness.

Keywords: Financial Performance, Merger and Acquisition., Stock Return