IMPACT OF REAL EARNINGS MANAGEMENT ON THE FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study examined how real earnings management affected the financial performance of listed Deposit Money Banks in Nigeria. The specific objectives of the study are to: examine the influence of real earnings management on the return on asset of listed Deposit Money Banks in Nigeria; investigate the influence of real earnings management on the return on equity of listed Deposit Money Banks in Nigeria; and examine the effect of real earnings management on earnings per share of listed Deposit Money Banks in Nigeria. The study used data obtained from twelve (12) listed Deposit Money Banks on the Nigeria Exchange Group between 2012 and 2021. The study employed panel least square regression technique to analyse the data. The results of the panel regression technique employed in the study revealed that real earnings management has negative and significant impact on return on asset (t=-2.07; p<0.05). In addition, the results revealed that real earnings management had positive but significant impact on the return on equity (t=4.37; p<0.05) while the impact of real earnings management on the earnings per share was found to be negative and significant (t=2.32; p<0.05). The study found evidence which suggested that real earnings management exerts negative impact on the financial performance of Nigerian listed DMBs. In line with the findings, this study recommended that regulatory authorities and other relevant institutions should reassess their supervisory role with the view to lower the practice of real earnings management in order to improve the financial performances of the banks