THE NEXUS BETWEEN EARNINGS MANAGEMENT, DIVIDENT POLICY AND COPORATE PERFORMANCE: EVIDENCE FROM QUOTED BANKS IN NIGERIA

Abstract

This research work examines the nexus between earnings management, dividend policy on corporate performance. The research study used ex-post-facto research design and stratify random sampling techniques to select all commercial banks quoted in Nigerian stock Exchange(NSE), selecting and Appling  the secondary data obtained from the annual financial reports of quoted banks in Nigeria. And data collected were effectively analyzed using descriptive statistics, correlation analysis, normality test, variance inflation test, heteroscedasticity test and multiple regressions. The results finding shows that accrual earnings management (AEM) has a coefficient 49.5. This indicates that AEM has positive effect on the corporate performance of banks as measured by ROE. The result implies that a unit increase on the AEM will cause the mean of ROE to increase by 49 units, the results show that real earnings management (REM) has coefficient of 16.6, which indicates that the increase in the management use of real earnings management by the firm will amount to increase in corporate performance as measured by ROE, and the lesser the use of REM on the accounting numbers the lesser the reported ROE of the banks will be. Base on the finding, the study therefore makes policy recommendations thus; Regulators should checkmate the use of AEM by the banks, to be able to forestall an ailing entity on time and at best make public certain information that would be hidden by use of accrual earnings management. And firms Management should moderate the use of real earnings management in projecting earnings of the enterprise to guarantee sustainability of the firms.

Keywords: Earnings Management, Dividends policy, corporate performance, Banking Sector, Nigeria.