EFFECTS OF MANAGERIAL ABILITY ON FINANCIAL REPORTING QUALITY OF DEPOSIT MONEY BANKS IN NIGERIA.

Abstract

The study investigated the effects of managerial ability on the financial reporting quality of deposit money banks in Nigeria between the period of 2018 and 2022.

The study used descriptive and inferential statistics whereby secondary data collected from financial statements of 11 deposit money banks listed on the Nigerian Exchange Group was used in the analysis. Managerial ability and financial reporting quality are the two variables used in this study, having used discretionary accruals to proxy financial reporting quality. Data Envelopment Analysis developed by Demerjian et.al (2012) was used to analyze managerial ability while financial reporting quality was analyzed using Ordinary Least Square Method. This study also did test of validity and reliability of the data and model used. Unit root test, redundancy fixed effect test (Hausman Test), random effect test, variable inflation factor test and auto co-linearity for robustness of the model used in the study.

The result of the study revealed that managerial ability has significant effect on financial reporting quality with a t-value of 2.8400 and a p-value of 0.0056. The result showed that there is positive relationship between financial reporting quality and managerial ability of the management staffs.

The study concluded that managerial ability has a significant and positive effect on financial reporting quality of deposit money banks in Nigeria. The study therefore recommends that banks should ensure skillful and technically competent managers are engaged during recruitment or promotion as their ability has effect on reliability and credibility of financial reporting.