Earnings Management and Shareholders Wealth Maximization of Listed Nigerian Banks

The broad objective of this study was to examine the effect of earnings management on shareholder’s wealth maximization of banks listed on the Nigeria Stock Exchange. To achieve this broad objective, the following variables; sales growth index, depreciation index, assets quality index and market value added were examined as factors explaining the effects of earnings management on shareholder’s wealth. Ex-post factor research design was adopted for this study. The data used in this study was obtained from the annual reports of 10 quoted financial banks on the Nigerian Stock Exchange which was sampled using the purposive sampling technique from the population of 15 banks. The study covered the period of eight years (2010- 2017). A model was specified and descriptive statistics, correlation analysis and regression analysis were carried. In order to ensure the reliability and validity of the results, the determinant of coefficient test and test for autocorrelation was also carried out. The study found out that earnings management variables; sales growth index has a positive insignificant relationship with market value added, growth index has a positive insignificant relationship with market value added. Also, asset quality index was found to be statistically insignificant with market value added. Finally, depreciation index was also found to be statistically insignificant with market value added. The study concludes that earnings management (sales growth index, deprecation index and asset quality index) is statistically insignificant with shareholders wealth (market value added) of listed banks; it was therefore recommended among others that earnings management is among the core issues of accounting and as such accounting bodies and other regulatory authorities need to adopt strict measure to harnessed the practice.