Effect of Board Attributes on Earnings Management of Listed Deposit Money Banks in Nigeria

Abstract

The main objective of this study was to investigate the effect of board attributes on earnings management of listed deposit money banks in Nigeria between 2016 and 2021. Board size, board diversity and board composition, were used as proxies for board attributes of listed deposit money banks in Nigeria, while discretionary accrual was used as proxy for earnings management in this study. The data was obtained from published annual audited accounts and financial reports of listed DMBs. A panel data of the twelve (12) quoted banks covering a period of five (5) years was employed. The study used various methods such as descriptive statistics, correlation, Hausman test and panel regression. The result found that board size and board composition was negatively significant on earnings management. while, board diversity was negatively insignificant on earnings management. The study recommends that shareholders of commercial banks in Nigeria should put in place ideal boards with adequate members so as to provide an oversight role that would minimize on earnings management. Also, the study recommends that deposit money banks in Nigeria should ensure that the composition of the board could properly constitute to have audit committees and independent directors who will bring in outside experience and expertise that would minimize earnings management. Finally, due to the insignificant effect of board diversity on earnings management, banks management should increase the awareness about the benefit of gender diversify Board members and give women the opportunity to participate in decision making process and share their knowledge.

Keywords: Board Attributes, Board Size, Board Diversity, Board Composition, Earnings Management, DMBs

DOI: 10.7176/RJFA/14-14-05

Publication date:July 31^st 2023