Income Smoothing and Market Share Price of Listed Commercial Banks in Nigeria
Keywords:
accrual income, discretionary income, income smoothing, market shareAbstract
The study examined the effect of income smoothing on market share price of listed commercial banks in Nigeria. It adopted an ex-post facto and correlation designs. Hypotheses were tested and established using the ANOVA technique with the aid of SPSS version 25.0. The population was limited to 10 (ten) listed commercial banks on the Nigerian Exchange Group. The study collected data through secondary sources for a period of 5 years (2018-2022). The instrument is their audited annual financial statements. Income smoothing was measured using the accrual-based methods, while firm value was measured using share price. Findings showed that income smoothing (total accruals and discretionary income) has no significant effects on the market share price of the studied commercial banks in Nigeria. Hence, it was recommended that income smoothing in listed money deposit banks have no significant effect on the market share price of listed commercial banks in Nigeria.
References
Aguguom A. & Salawu R. (2022). Earnings smoothing and market share price: evidence from Nigeria. Academy of Accounting and Financial Studies Journal, 26(2), 1-13.
Ajekwe C. & Ibiamke .A. (2017). Loan Loss Provisions, Earnings Smoothing and Capital Management under IFRS: The Case of Deposit Money Banks in Nigeria American Journal of Management Science and Engineering 2017; 2(4), 58-64
Alwan K. (2021). Corporate governance mechanism as income smoothing suppressor. Accounting, 7(3), 977–986
Alhadab M. (2018). Real and accrual earnings management around initial public offerings in Jordan. International Business Research, 11(1), 204-216
Asuquo M V, Jeremiah O. O., & Obialor D. C. (2024) Business Efficiency and Earnings Quality of Commercial Banks in Nigeria. Journal of Accounting and Financial Management, 10 (4), 278-292
Bandyopadhyay P., Huang A. & Wirjanto T. (2011). Does income smoothing really create value? Available at: zhJps://papers.ssrn.com/so13/papers.cfm?abstract-id51784017
Beidleman C. (1973). Income smoothing: the role of management. The Accounting Review, 48(4), 653-667
Dechow P. & Dichev I. (2016). The quality of accruals and earnings: the role of accrual estimation errors. The Accounting Review, 77 (1), 35-59
DeFond M & Park C. (2017).Smoothing Income in Anticipation of Future Earnings. Journal of Accounting and Economics, Vol. 23, pp. 115-139
Ernayani R. & Robiyanto R. (2016). The effect of the cash flows, gross profit, and company size on Indonesian stock returns: A study on the chemical and basic industry companies during the periods of 2009-2014. International Journal of Applied Business and Economic Research, 14(3), 339–351.
Eisenhardt K. (2019). Agency theory: an assessment and review. The Academy of Management Review, Vol. 14 No. 1, pp. 57-74
Gan H. P. & Suh S. (2020). Non-financial performance measures, CEO compensation, and firms’ future value. Journal of Business Research, 110(C), 213–177. https://doi.org/10.1016/j.jbusres.2020.01.002
Goel. A. & Thakor. A. (2013). Why do firms smooth earnings? Journal of Business, Vol. 76, pp. 151-192
Handriani. E & Robiyanto. R. (2019). Institutional ownership, independent board, board size, and firm performance: Evidence from Indonesia. Contaduría y Administración, 64(3), 1–16. https://doi.org/10.22201/fca.24488410e.2018.1849
Jabin S. & Sumona I. (2021). Bankruptcy risk and income smoothing tendency of NBFIs in Bangladesh. Journal of Business, Economics and Environmental Studies 11(2) 27-38.
Jensen M. & Meckling W. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
Kurniawan. S. (2019). Factors analysis are affecting of tax management on effective tax indicators. Journal of Accounting, 16(2), 213–221. http://journal.feb.unmul.ac.id/index.php/AKUNTABEL/article/view/5949
Kim H, Lee. S. & Keun Y. (2020). Real earnings management and the cost of debt capital: international evidence. Asia-Pacific Journal of Accounting & Economics, 27(2), 151-172
Kwak S. & Park J. (2015). Empirical Evidence on the Relation between Real Earnings Management and the Cost of Debt. Tax and Accounting Journal, 16(5), 243-274
Mohammadi S & Nezhad B. (2015). The role of disclosure and transparency in financial reporting. International Journal of Accounting and Economics Studies, 3(1), 60. https://doi.org/10.14419/ijaes.v3i1.4549
Othman H. & Mersni H. (2014). The use of discretionary loan loss provisions by Islamic banks and conventional banks in the Middle East region: a comparative study. Studies in Economics and Finance, 31(1), 106-128
Osisioma B. & Enahoro A. (2006). Creative accounting and option of total quality accounting in Nigeria. Journal of Global Accounting, 2(1), 5-15
Panda B. & Leepsa N.M. (2017). Agency theory: review of theory and evidence on problems and perspective. Indian Journal of Corporate Governance, 10(1), 74-95
Richardson S, Sloan R, Soliman M & Tuna I. (2015). Accrual reliability, earnings persistence, and stock prices. Journal of Accounting and Economics 39: 437-485
Shen J and Huang P. (2008). Do artificial income smoothing and real income smoothing contribute to firm value equivalently? Journal of Banking and Finance, 33(2), 224-233, doi: 10.1016/j.jbankfin.2008.07.012
Shen Z. & Huang P. (2013), Do artificial income smoothing and real income smoothing contribute to firm value equivalently? Journal of Banking and Finance, 33 (2), 224-23
Strebulaev I. & Yang B. (2013). The mystery of zero-leverage firms. Journal of Financial Economics, 109(1), 1-23
Vasiljevi M. (2019). Corporative management and agency problem. Faculty of Law, Belgrade, No. 1, pp. 5-25
Watts R. & Zimmerman J. (1978). Positive Accounting Theory, Prentice –Hall Inc. with International Accounting Standards. Accounting Forum, 23 (3), 293-305
Zhai J. & Wang Y. (2016), Accounting information quality, governance efficiency and capital investment choice. China Journal of Accounting Research, Vol. 9 No. 4, pp. 251-266
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 International Journal of Accounting Intelligence (IJAI)
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
