Ownership Structure and the Informativeness of Accounting Earnings of Listed Deposit Money Banks in Nigeria

Ownership Structure and the Informativeness of Accounting Earnings of Listed Deposit Money Banks in Nigeria.

ABSTRACT  

This study assessed the effect of Ownership Structure on Informativeness of Accounting Earnings of listed Deposit Money Banks in Nigeria. Ownership structure is proxied with Managerial ownership, Institutional ownership and Ownership concentration, while Informativeness of Accounting Earnings is proxied using Fan and Wong (2002) model.

The study used a purposive stratified sampling technique to filter out banks that do not satisfy the criteria set out for inclusion thereby arriving at the sample size of ten (10) listed Deposit Money Banks in Nigeria out of twenty-one (21). Secondary data source was used which were extracted from the Annual reports and accounts of the sampled Banks from 2006-2012.

Multiple Regression, fixed and random effect analysis were adopted in the study. The findings revealed that, Managerial Ownership is negatively and significantly related to Earnings Informativeness, while Institutional Ownership and Ownership Concentration are positively and significantly related to Earnings Informativeness of listed Deposit Money Banks in Nigeria.

TABLE OF CONTENTS

Title Page – – – – – – – – – i
Declaration – – – – – – – – – ii
Dedication – – – – – – – – – – iii
Certification – – – – – – – – – – iv
Acknowledgments – – – – – – – – – v
Abstract – – – – – – – – – – vii
Table of Contents – – – – – – – – – viii

CHAPTER ONE
Introduction
1.1 Background to the Study – – – – – – – 1
1.2 Statement of Problem – – – – – – – – 4
1.3 Objective of the Study – – – – – – – 5
1.4 Hypothesis of the Study – – – – – – – 6
1.5 Scope of the Study – – – – – – – – 6
1.6 Significance of the Study – – – – – – – 6

CHAPTER TWO
Literature Review
2.1 Introduction – – – – – – – – – 8
2.2 The Concept of Ownership Structure – – – – – – 8
2.3 Informativeness of Accounting Earnings – – – – – 16
2.4 Review of Empirical Studies – – – – – – – 19
2.4.1 Managerial Ownership and Earnings Informativeness- – – – 21
2.4.2 Institutional Ownership and Earnings Informativeness- – – – 24
2.4.3 Ownership Concentration and Earnings Informativeness- – – – 27
2.5 Theoretical Framework- – – – – – – – 31
2.6 Summary – – – – – – – – 32

CHAPTER THREE
Research Methodology
3.1 Introduction – – – – – – – – – 34
3.2 Research Design – – – – – – – – 34
3.3 Population of the study and Sample Size – – – – – 34
3.4 Sources and Method of Data Collection – – – – 36
3.5 Variables and their Measurement – – – – 36
3.6 Model Specification – – – – – – – – 38
3.7 Techniques of Data Analysis – – – – – – – 40
3.8 Summary – – – – – – – – – 40

CHAPTER FOUR
Data Presentation, Analysis and Discussion
4.1 Introduction – – – – – – – – – 41
4.2 Descriptive Statistics of the variables- – – – – – 41
4.3 Correlation Matrix of Dependent and Independent Variables- – – 43
4.4 Regression Results – – – – – – – – 45
4.5 Hypothesis Testing and Robustness tests – – – – – 47
4.6 Discussion of Findings – – – – – – – 52

CHAPTER FIVE
Summary, Conclusion and Recommendations
5.1 Summary – – – – – – – – – 54
5.2 Conclusions – – – – – – – – – 55
5.3 Recommendations – – – – – – – – 56
5.4 Limitations of the Study – – – – – – – 57
5.5 Suggestion for further research – – – – – – 57
List of Tables
3.1 Summary of Variables and their Measurement – – – – 37
4.1 Descriptive Statistics – – – – – – – – 42
4.2 Correlation Matrix Table – – – – – – – 44
4.3 Summary of Regression Results – – – – – – 45
4.4 Variable Coefficient – – – – – – – – 48
Bibliography – – – – – – – – – 59
Appendices – – – – – – – – – 75

INTRODUCTION  

Accounting has developed over time as an essential stewardship function, which enables owners of the business to extract accountability from the managers who are entrusted with the task of running the organization. The custodianship function is at the root of corporate governance, and provides the basis for the sacred trust upon which modern business is built (Osisioma, 2001).

The separation of ownership and control due to growth in the size of businesses during the industrial revolution in the 19th century led to the development of stewardship accounting, where those in control of business were made to report to the owner by providing them with accounting information through annual reports and accounts. The annual reports which are usually prepared on historical basis at the end of every financial year are expected to serve as a measurement of firm value which should more or equal to market value.

Any change in the value of the firm as a result of income generated from operations indicates an improvement in firm’s value. The level of improved earnings reported in the annual reports determines the informativeness of the accounting figures in the firm’s financial statement. Informativeness of accounting earnings involved the accounting process of measuring earnings as the change in firm’s wealth and focusing on fair valuing of assets and liabilities (Dechow, Ge and Schrand,2009).

The information quality of reported earnings is influenced by an array of factors, most of which stem from the demand for such information for use in contractual arrangements. Firm’s ownership structure is among the factors that influences quality of reported earnings due to incentive alignment and monitoring effects of the selected components of ownership structure. Managers to a greater extent are the ones entrusted with the affairs of firms whom in most cases have little or no equity interest in it. 

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StudentsandScholarship Team.