EFFECT OF EARNINGS QUALITY ON SHAREHOLDERS' VALUE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study investigates the effect of earnings quality on shareholders' value among listed deposit money banks in Nigeria, with emphasis on four core attributes of earnings quality: earnings persistence, predictability, accrual quality, and earnings smoothness. In light of persistent concerns regarding financial statement transparency and investor trust, particularly in Nigeria's post-recapitalization banking sector, this research seeks to provide empirical evidence on how earnings quality influences market-based performance indicators that reflect shareholders' value. The study adopts an ex-post facto research design, using panel data from 9 listed banks licensed for international operations over a 10-year period (2013–2024). Secondary data were extracted from audited financial reports and analyzed using descriptive statistics, correlation matrix, and multiple regression analysis via STATA 7 software. Findings reveal that earnings predictability (p = 0.003) and accrual quality (p = 0.001) have significant positive effects on earnings persistence, which serves as a proxy for financial sustainability and long-term shareholder value. Conversely, earnings smoothness (p = 0.556) shows a non-significant effect, suggesting that smoothing practices may not impact on earnings sustainability. The adjusted R-squared of 0.6234 indicates a strong model fit, confirming that the predictors explain a substantial portion of the variation in shareholder value. The study concludes that transparent and predictable financial reporting enhances investor confidence and long-term firm valuation. It recommends that banks improve on their internal controls over discretionary accruals