Financial Reporting Disclosure and Performance of Deposit Money Banks in Nigeria

Arowolo Oluwafemi Victor1, Muritala Abdulafiz Oyinkansola2, Oluwaseun Adebola3 & Ayokunle Owoniyi4
Robert Gordon University, Aberdeen. Scotland
DOI – http://doi.org/10.37502/IJSMR.2025.8516

Abstract

This study examines into the effect of financial reporting disclosure on the performance of deposit money banks in Nigeria. The study employed ex-post facto research design and convenience sampling technique to select five deposit money banks in Nigeria. The secondary data was sourced from the audited financial statement of the banks from 2013 to 2022. The panel regression technique was employed to determine the relationship between financial reporting disclosures and financial performance of deposit money banks in Nigeria Findings from revealed that retained earnings, net cash flow and firm size have positive significant effect on Net Interest margin. Firm size has negative significant effect on Net Interest margin. It also revealed that retained earnings and net cash flow have negative significant effect on earnings per share while intangible asset and firm size has positive significant effect on earnings per share.  It is therefore recommended banks are advised to prioritize increasing retained earnings and optimizing net cash flow to improve their net interest margin. It’s important to manage intangible assets carefully to reduce their negative impact, possibly by closely examining their acquisition and amortization costs.

Keywords: Financial Reporting Disclosure; Earnings per share, Net Cash flow.

References

  • Adeolu Abata, M., & Ayinde Amoo, S. (2020). International Financial Reporting Standards (IFRS) adoption and banks performance in Nigeria (A study of selected banks). Management Studies and Economic Systems, 5(1/2), 39-48.
  • Adeyemi, A. A., & Asaolu, T. (2013). An empirical investigation of the financial reporting practices and banks’ stability in Nigeria, Kuwait Chapter of Arabian Journal of Business and Management Review, 2(5), 157 – 180.
  • Akinleye, G. T. (2016). Effect of international financial reporting standards (IFRS) adoption on the performance of money deposit banks in Nigeria. European Journal of Business, Economics and Accountancy, 4(4), 87-95.
  • Amahalu, N. (2017). Determinants of audit quality: Evidence from deposit money banks listed on Nigeria Stock Exchange. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(2), 117-130.
  • Babatunde, A. A., & Adeniyi, A. (2019). The effect of financial reporting quality on corporate performance in Nigeria. Sumerianz Journal of Economics and Finance, 2(12), 147-155.
  • Davis, J.H., Schoorman,F.D & Donaldson, L. (1997) Toward a Stewardship. Theory of Management Review, 22(1), 20-47
  • Ekwe, M. C., Abaa, E. O., & Okrolor, J. A. (2020). Adoption of International Financial Reporting Standards and financial performance of listed deposit money banks in Nigeria. Corporate governance.
  • Elorrieta, A. M. (2002). Disclosure and transparency: accounting and auditing, the third meeting of the Latin American corporate governance roundtable organized by the Organization for      Economic Co-operation and Development in cooperation with the World Bank Group, held        at Bolsa Mexicana de Valores, Mexico City, Mexico, 8-10 April.
  • Gellings, J. (2017). IFRS and Enforcement on Audit Quality: Incorporating the Mediating Effect of Audit Fees.
  • Grossman, S.J. (1981). The Informational Role of Warranties and Private Disclosure about Product Journal of Law and Economics, 24 (3), 461–483.
  • Haixia Wu & Jianping Li (2023) The relationship between environmental disclosure and financial performance: mediating effect of economic development and information penetration, Economic Research-Ekonomska Istraživanja, 36:1, 116-142, DOI: 1080/1331677X.2022.2072355
  • HASSAN, A. O., & MUSA, W. A. (2023). Ifrs Disclosure Guidelines and Acceptability of Financial Reporting Framework: Evidence from Listed Deposit Money Banks in Nigeria. In 8th Annual International Academic Conference on Accounting and Finance(P. 393).
  • Healy, P.M., & Palepu, K.G. (2001). Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature. Journal of Accounting and Economics, 31, 405−440.
  • Jensen, M., & Meckling, W.H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3 (3), 305−360
  • Jibril, R. S. (2019). The impact of international financial reporting standard (IFRS) adoption on accounting quality in Nigerian listed money deposit banks. Applied Finance and Accounting, 5(1), 49-57.
  • KWASAU, N. A. (2021). Impact of International Financial Reporting Standards Adoption on Reporting Quality of Deposit Money Banks in Nigeria.
  • Loprevite, S., Raucci, D., and Rupo, D. (2020). KPIs reporting and financial performance in the transition to mandatory disclosure: The case of Italy. Sustainability, 12(12), 5195.
  • Lu, H., Shin, J. E., & Zhang, M. (2023). Financial reporting and disclosure practices in China. Journal of Accounting and Economics, 101598.
  • Mc Cahey, J. P. & Mc Gregor, W. J. (2013). The conceptual framework: cornerstone of high-quality financial reporting, Commentaries on financial reporting, September
  • Modugu, K. P. (2017). Firm performance and corporate disclosure level of listed companies in Asian Journal of Finance & Accounting, 9(2), 71-87.
  • Musa, W. A., Salman, R. T., & Amoo, I. O. (2021). Determinants of audit fees in quoted financial and nonfinancial firms. Corporate Law & Governance Review, 3(2), 30–40
  • Ogundeyi, A. O. S., & Tunji, T. (2021). Adoption of International Financial Reporting Standards and Corporate Performance of Deposit Money Banks in Nigeria.
  • Ogunmakin, A. A., Fajuyagbe, B. S., & Akinleye, M. J. (2021). Adoption of International Financial Reporting Standards (IFRS) and financial performance of deposit money banks in Nigeria. Management & Accounting Review (MAR), 20(1), 155-176.
  • Ojeka, S. A., Mukoro, D. O., & Kanu, C. (2015). Do financial reporting disclosures enhance firm financial performance in the nigerian manufacturing companies? Mediterranean Journal of Social Sciences, 6(6), 332.
  • Oladele, P. O., Aribaba, F. O., Lateef, A. O., & Ajayi, O. M. (2018). An empirical study of human resource accounting disclosure on financial performance of selected listed firms in The journal of accounting and management, 8(2), 70-82.
  • Olukayode, A. E., Philip, A. O., & Lydia, O. Y. (2017). A critical appraisal of financial reporting disclosure on performance of quoted companies in Nigeria. International journal of economics, commerce and management, 5(12), 1-15.
  • Palea, V. (2013). IAS/IFRS and financial reporting quality: lessons from the European Experience, China Journal of Accounting Research, 6, 247–263.
    1. private firms. Tilburg University, School of Economics and Management.
  • Saliu, P. O. and Adetoso, A. J. (2018). Relevance of financial reporting on profitability of quoted companies in Nigeria. International Journal of Economics, Commerce and Management, 6(3): 357-74.
  • TITUS, G. N. (2021). Impact of International Financial Reporting Standard adoption on the Financial Performance of Nigerian Manufacturing Firms.
  • Verrecchia, R.E. (2001). Essays on disclosure. Journal of Accounting and Economics, 32, 97−180.
  • Xu, W. (2014). The effects of IFRS adoption on earnings management: Evidence from the UK
  • Yahaya, O. A., Yusuf, M. J., & Dania, I. S. (2015). International Financial Reporting adoption and financial statement effects: Evidence from listed deposit money banks in Nigeria, Research Journal of Finance and Accounting, 6(12), 107 – 122.
  • Yusuf, M. A., Adebayo, P. A., & Yusuf, R. N. (2018). Effect of financial performance on voluntary disclosure of listed financial firms in Nigeria. International Journal of Economics, Commerce and Management, 6(12).
  • Zango, A. G., Kamardin, H. & Ishak, R. (2015). Mandatory International Financial Reporting Standards 7 (IFRS 7) disclosure by listed banks in Nigeria, Academic Journal of Interdisciplinary Studies, 4(2), 435 – 440.