Corporate Financial Disclosure in Nigerian Deposit Money Banks

Abstract

The study examined the impact of corporate financial disclosure on the performance of Nigerian Deposit Money banks. It evaluated the extent to which Nigerian Deposit Money banks complied with the financial disclosure requirements as given by the monetary authorities. Primary data collected through questionnaire were used for the study. Out of 120 copies of questionnaire served on respondents, 100 copies were recovered and used for the analysis of the study. The analytical tools used for the study are the t-test and the Analysis of variance (ANOVA). From the hypotheses tested, the results show that corporate financial disclosure has a significant influence on the banks' stability and performance in the Nigerian financial sector. Therefore, the study concludes that the corporate disclosure of financial reporting practices by banks in general will enable them to work towards improving and managing their non-performing loans effectively and efficiently for stability and hence better performance. It was therefore recommended among others that efforts should be geared towards improved corporate financial disclosure among money Deposit Money banks in Nigeria and mandatory compliance with the code of corporate governance and effective legal framework which specifies the rights and obligations of banks, it's directors and shareholders.Keywords: Financial disclosure, Accounting standard, Corporate governance, Financial sector, Non-performing loans INTRODUCTIONThe disclosure principle in Accounting requires that financial statements present the most useful amount of relevant information that is necessary in order not to be misleading. The process of full disclosure has to do with ensuring the integrity of data in the rendition of reports to the supervisory authority and the public in order to enable them ascertain the true financial position and performance of deposit money banks.

IFRS Disclosures and Protection of Shareholders’ Interests in Nigerian Quoted Firms

“…Ayodele and Afolabi [3] investigated the relationship between corporate financial disclosure and Nigerian banks' performance and stability with focus on shareholders. The study concludes that corporate financial disclosure has a significant influence on the banks' stability and performance in the Nigerian financial sector.…”

“…Disclosure weakness has been adjudged as a pivotal cause of financial crises and corporate failures as witnessed globally [13], [86] and specifically in Nigeria [3] Owolabi, [87]. With shareholders having financial interests in the business firm, it becomes imperative for disclosure to adequately reflect and meet the informational needs of these shareholders for effective decision making, proper protection and in the long term ultimate sustainability of the company [88], [89].…”

“…Whether financial or non-financial, IFRS disclosures are important to shareholders as a basis for their decisions and as evidence of the extent of representation and protection of their interests by business firms [2]. IFRS disclosure reporting could also have a psychological effect on the reporting entities and it could help to drive stability and better performance [3]. More than ever, stakeholder management is important first to acknowledge the context of business operations and value creation and secondly to drive sustainability [4]- [6].…”

“…Disclosure is expected to drive a better flow of information for proper decision making between business firms and stakeholders [10], [3] while reducing information asymmetry [11]. However, the recent market and corporate failures are largely attributed to disclosure weakness [12], [13].…”

“…Many researches works on disclosure have concentrated on impact of disclosure on performance [3], [16]- [23]. Also, some researchers empirically identify and consider the effect of firm-specific attributes on the level and quality of disclosure [24]- [26].…”