European Journal of Accounting, Auditing and Finance Research (EJAAFR)

EA Journals

Nigerian Banks

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 emergence of high technology, information, and innovation based environment in the world today has greatly altered the way and manner businesses are done globally. This new technology which of course utilizes high level of intellectual capital also determines the level of financial performance of business organizations. Some organizations which hitherto were rated very high in terms of their profitability and other financial performances are today being rated very low simply because of their non-adoption of this intellectually based technology. This study uses the Value Added Intellectual Coefficient (VAIC) model to compare both the intellectual capital indices as well as the financial performance variables of six highly rated banks in Nigeria with the aim of determining if the deviations in their financial performance indices could be explained by the deviations in the banks’ intellectual capital variables. The study adopted the ex-post facto research design. It was systematically conducted using longitudinal time series data generated from the Nigeria Stock Exchange and from annual reports and accounts of the selected banks in Nigeria spanning from year 2000 to 2012. The study adopted the Duncan Multiple Range Test (DMRT) of ANOVA across the six selected banks in Nigeria for the test of the hypotheses. The SPSS statistical software (version 17.0) was used for the data analysis. From the analyses, it was discovered that there were significant deviations in both the financial performance indicators and in the intellectual capital variables among the six banks studied. The results further showed that the banks are statistically different in both the intellectual capital indices and in the financial performance indicators. The study also established that the banks with high intellectual capital also recorded high financial performance and therefore recommends that all banks should embrace this new intellectually based technology in order to enhance their financial performances, returns to their different stakeholders as well as in their service delivery to their customers.

Keywords: Financial Performance, Intellectual Capital, Nigerian Banks, VAIC

Performance Measurement Systems and Firms’ characteristics: Empirical evidence from Nigerian banks (Review Completed - Accepted)

The banking industry is important in every economy and this has long been emphasized by replete of studies undertaken in this connection. The Nigerian banking industry, being the second largest in sub- Saharan Africa after the South African banking industry has evolved and undergone remarkable transformation over the years. The evaluation of the Performance Measurement Systems (PMS) of banks in Nigeria— to ensure they are going concerns—becomes highly desirable and merits attention, hence the place of this research. The objectives of the research were to: identify the elements of PMS; investigate the appropriateness and effectiveness of PMS; and assess the interrelationship between the PMS and strategy of the Nigerian banking industry. Statistics such as charts, percentage analysis, Wilcoxon, Chi – square, Kruskal Wallis, and Mann- Whitney U tests were employed for data analyses. Following research findings that traditional financial measures were commonly used in the Nigerian banking industry, the study recommends the adoption of more innovative PMS; the focus on non-financial measures and customer-based measures could greatly improve performance. Also, the inclusion of performance measures like innovation, continuous improvement and risk management should be effected in the PMS of the Nigerian banking industry, to strengthen monitoring and overall improvement in the industry.

Keywords: Business processes, Nigerian Banks, Non-financial measures, Performance Measurement Systems, Strategy

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