Effect of Executive Compensation on Financial Reporting Quality of Nigeria’s Listed Deposit Money Banks

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Authors: Ramat Eneze TIJANI

Abstract

Agency problem appears to be playing out on the quality of the financial reporting of deposit money banks in Nigeria as reflected by incessant corporate governance concerns despite publicly reported compensation ranking as one of the best among the industries in Nigeria. As a result, this study examined the effect executive compensation on the financial reporting quality of deposit money banks in Nigeria. the study adopts longitudinal design and extracted data from the annual reports of listed deposit money banks over 10/11 years covering 2014/2015 through 2024. The data were subjected to preliminary and diagnostic analysis while hypothesis was tested using random effect estimation of the study model. It was discovered that executive compensation plays a significant role in affecting the financial reporting quality of deposit money banks in Nigeria with the statistical parameters of: coefficient = 1.322; t = 3.07; P<0.05. To this end, the study concluded that executive compensation significantly reduces financial reporting quality. the study thus recommends that the agency contact should reconsider focus on the remuneration of board of directors to enhance financial reporting quality. more importantly, regulators could focus attention on metric that will compel the directors to observe ethics and uphold the quality of financial reporting of deposit money banks in Nigeria.

Keywords: Financial Reporting Quality, Executive Compensation, Board Remuneration, Discretionary Accruals

2026 - NIJAF - 18 - 107 Ramat Tijani.pdf

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