Effects of Environmental Accounting and Reporting on Corporate Performance

 – Effects of Environmental Accounting and Reporting on Corporate Performance –

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ABSTRACT

The objective of this study is to investigate the effects of Business Combination as the key performance ratio of Deposit Money Banks in Nigeria with a focus on quoted DMBs in Nigeria Stock Exchange from 1996-2015.

This study made use of secondary data obtained from fact books, annual report and accounts of the selected banks under study.

The relevant data were subjected to statistical analysis using paired sample test and weighted mean with the aid of Statistical Package for the Social Sciences (SPSS) software.

The result of the study shows that business combination (proxy by shareholders’ fund) has a statistically insignificant effect on net profit and return on asset of quoted Deposit Money Banks (DMBs) in Nigeria.

More so, that business combination (proxy by shareholders’ fund) has a statistically significant effect on return on equity of quoted Deposit Money Banks (DMBs) in Nigeria at 5% level of significance.

The study recommends that Central Bank of Nigeria (CBN) should ensure that only strong banks are merged so as to form mega bank in order to achieve the synergy that the bank consolidation promises.

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INTRODUCTION

1.1Background of the Study

Business combination is a transaction or other event in which a reporting entity (the acquirer) obtains control of one or more businesses (the acquirer).

The Nigeria financial system had attracted many write ups and interest of academics, investor, stakeholders and other governmental agencies at different levels. The process of reforming the financial services has been gathering pace in Nigeria and beyond since two decades ago.

Business combinations are usually aimed at combining and creating an economic advantage such that the combination of the present value of the combined business is greater than the sum of their individual values as separate entities. This is the result normally achieved through business combination.

Apart from financial distress and corporate failures in recent times within the banking sector globalization has also led to the financial crises across the world which made manifest by inability of many banks to finance multinational transactions that requires lumpy sum of money due to low level of liquidity and insufficient capital (Inoukhude,2003).

The financial globalization which gave birth to integration of a country’s local financial system and international financial markets and institution has led to various forms of business combination as a reaction to the phenomenon.

The complexity and distinctiveness of these transactions have forced so many countries to restructure their financial system to mitigate the problems of shortage of funds.

Therefore, the process of bank consolidation is in response to the wave of consolidations spreading across the globe (Nuraddeen,2011).

In Nigeria, consolidation policy of banks was introduced in 2004 which made it mandatory for banks to raise their equity capital base from minimum of 2billion to 25billion.

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REFERENCES

Anderibom, Asquten, Obute&Obute Christopher (2015). The Effects of Mergers and Acquisitions on the Performance of Commercial Banks in Nigeria. International Journal of Education and Research, 3(4)

Anthony (2008). An evaluation of growth and merger and acquisition as a strategic growth options in the Nigerian banking sector. A dissertation presented in part of consideration for the degree of MA in corporate strategy and governance, University of Nottingham, United Kingdom.

Banerjee &Eckard (1998). Are mega mergers anticompetitive? Evidence from the first great.

Bragg (2014). How to calculate shareholders’ fund. www.accountingtools.com. Retrieved on October 8, 2016.

Brockington, R.B. (1987): Financial Management, 4th Edition, D.P. Publications, Eastleigh Hants, p.251.

Central Bank of Nigeria, (CBN) Briefs 2004-2005 Edition, Research & Statistics Department 2004 – 2005, 8-16.