This paper examines the influence of forced financial reporting disclosures on the behavior of reporting firms in the Nigerian banking industry. Market size, asset base and profitability were used as the selection criterion. The sample size represents seventy percent of the population. Forced disclosure metrics used were capital adequacy and liquidity ratios while reporting behavior was measured using income smoothing and loan loss provisioning. A regressed forced disclosure metric was performed on variables of the behavior of the reporting firm. Results suggest correlation between forced disclosure and the behavior of reporting firms. No significant relationship existed between capital adequacy and liquidity ratio with income smoothing. Correlation between capital adequacy ratio and loan loss provisioning behavior was significant suggesting heavy reliance on loan loss provisioning to smooth income in order to meet regulatory requirements.
Keywords: Banking Industry, Capital Adequacy Ratio and Loan Loss Provisioning, Forced Disclosure, Income Smoothing, Liquidity Ratios
