EXCERPT FROM THE STUDY
The study sought to determine the effect of earnings management on financial performance of selected commercial banks in Lagos, Nigeria where a sample of 82 senior managers drawn from accounts departments in 8 banks were selected using stratified random sampling procedures. The collected primary data using structured 5-point likert scale questionnaire where both face to face and a drop and pick method were used to serve questionnaires. Both descriptive and correlation research designs were adopted in the study.
A total of 88 questionnaires were administered to respondents with 80 of them returning the questionnaires fully filled. The internal consistency of data was determined using Cronbach’s Alpha on 5 items that yielded overall value of 0.850. Results on gender indicated that 66.3% of the respondents were males while 33.8% of them were females. Majority (51.3%) of them was aged more than 45 years old and that 35% of them had worked in the banks for more than 16 years thus gathering the necessary work experience on earnings management practices. It was clear that majority (42.5%) of the participants in earnings management practices by banks were the finance managers and that most (38.8%) of the respondents were holders of Masters
Degree thus were competent to provide relevant responses in their areas of duty.
The study found that most banks had adopted different earnings management practices to enhance performance. It was also clear that the banks had recorded improvements in financial performance as shown by a mean score of 4.2750. This improvement was evident in profitability ratios by a mean score of 4.5750, improved sales volume by a mean score of 4.5875, maximization of shareholders wealth and regular payment of dividends as shown by a mean score of 4.2750, increases in total assets by a mean score of 4.4625 and increase in the amount of shares bought or held in stock at the NSE by mean score of 4.4625.
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