Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Financial Reporting Quality and Its Impact on Firm Performance: A Study of Corporate Governance

Maxwell Smith Ogbotor Ph.D, Izobo Juliet Oborakpororo

Abstract

The study investigated the effect of corporate governance practices on financial reporting quality in Nigerian Deposit Money Banks with special focus on selected banks in Warri, Delta State. The growing number of financial misstatements, corporate scandals and stakeholder concerns regarding transparency have created the need for effective corporate governance mechanisms that ensure the integrity and reliability of financial reports. The study examined the effect of internal control system, board structure, ethical standards and regulatory compliance on financial reporting quality in Nigeria Deposit Money Banks. The study adopted a survey research design. Data was collected thru administration of structured questionnaires on employes of selected Deposit Money Banks in Warri. The study was guided by corporate governance principles which emphasize accountability, transparency, responsibility and fairness in the operations and financial disclosures of organizations. Results indicated that the internal control system has a positive and significant effect on the quality of financial reporting. This implies that the higher the level of the control system, the more accurate, reliable and credible the financial statements are. The study also found that the structure of the board has a significant effect on the quality of financial reporting, implying that competent, independent and organized boards are capable of providing strong oversight which enhances financial reporting practices. Moreover, ethical standards had a statistically significant positive effect on financial reporting quality by improving transparency, accountability and integrity of financial transactions and disclosures. Furthermore, it was also found that regulatory compliance had a significant and positive effect on the quality of financial reporting. Thus, adherence to statutory requirements and regulatory guidelines enhances the confidence of stakeholders and improves the credibility of financial reports. In view of these findings, the study concludes that corporate governance is important to the improvement of financial reporting quality in Nigerian Deposit Money Banks. The study suggests that banks should improve their governance structures thru continuous enhancement of internal control systems, JAFM JAFM JAFM board effectiveness, ethical conduct, and compliance with regulatory standards set by relevant authorities.

Keywords

CorporateReportingInternalBoardStructureEthicalDeposit Money Banks.

References

Abbott, L. J., Parker, S., and Peters, G. F. (2014). Audit Committee Characteristics and Restatements. Auditing: A Journal of Practice & Theory, 23(1), 69-87. Adeyemo, K. A., & Adepoju, J. A. (2023). Financial reporting quality and corporate performance of business organizations in Nigeria. International Journal of Social Sciences and Management Review, 6(3). Aguguom, A. T., Akintoye, I. R., & Salawu, R. O. (2018). Earnings quality and firms financial performance: A missing link in the listed firms in Nigeria. International Journal of Accounting & Finance, 7(2), 32–54. Akin Dele (2019). The Principles of Ethics. All publishers Alice Benson (2017). Regulatory Compliance in Nigerian Banks.Yamala Printing (3) 64-35 Aroghene K. G. (2022). Effect of capital adequacy, bank size and liquidity on stability of fugaz bank in Nigeria. International Journal of Academic Management Research, 6(12), 1-7 Aroghene K. G. & Onuorah, A. C. (2023). Empirical investigation of bank survival and agro- production on economic resilience. Global Sustainability Research.https://doi.org/10.56556/GSSR.V214.689. Aroghene K. G. & Akpoyibo, G. A. (2023). Naira swap objectives and impact on the performance of small and medium scale enterprise. International Journal of Management and Entrepreneurship, 5(4), 233-243. Aroghene K. G. (2023). Effect of board independence and audit independence on bank stability in Nigeria. International Journal of Academic Management Science Research, 6(11), 67-71. Aroghene K. G., Obiekea, P.O. & Imene, A. (2025). The productivity trap: why nations stay poor and how Nigeria can escape. Technische Sicherheit, 25(8), 398-410. Black, J. (2021). Decentring Regulation: Understanding the Role of Regulation and Self- Regulation in a ‘Post-Regulatory’ World. Current Legal Problems, 54(1), 103-146. Black, J. (2021). Critical Reflections on Regulation. Australian Journal of Legal Philosophy, 28, 1-37. Bovens, M., Goodin, R.E., and Schillemans, T. (2021). The Oxford handbook of public accountability. Oxford University Press. Brown A. R. and William P. (2019) Banking and Corporate Governance Practices. Books and more. (6) 30-31 Central Bank of Nigeria. (2006). Code of Corporate Governance for Banks and Discount Houses in Nigeria. Retrieved from https://www.cbn.gov.ng Chukwueze D. (2019). Board Structure and Organizational Leadership. Betty Lives Publishers (2), 24-27 Committee of Sponsoring Organizations of the Treadway Commission . (2013). Internal Control—Integrated Framework. Retrieved from https://www.coso.org Committee of Sponsoring Organizations of the Treadway Commission . (2013). Internal Control – Integrated Framework. Retrieved from https://www.coso.org Companies and Allied Matters Act, 1990, revised 2004. COSO. (2013). Internal Control – Integrated Framework. Committee of Sponsoring Organizations of the Treadway Commission. Dalton, D. R., Daily, C. M., Ellstrand, A. E., and Johnson, J. L. (2018). Meta‐analytic reviews of board composition, leadership structure, and financial performance. Strategic Management Journal, 19(3), 269-290. JAFM JAFM JAFM Danjuma, M., Teru, P., Jerry, M., & Adamu, R. (2019). Compliance with Company and Allied Matters Act evincing financial reporting quality impact on performance of small and medium enterprises in Nigeria. Research Journal of Finance and Accounting, 10(6). https://doi.org/10.7176/RJFA/10-6-08 Dechow, P., Ge, W., & Schrand, C. (2010). Understanding earnings quality: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50(2–3), 344–401. https://doi.org/10.1016/j.jacceco.2010.09.001 Duarte, A. F., Lisboa, I., & Carreira, P. (2024). Does earnings quality impact firms' performance? The case of Portuguese SMEs from the mold sector. Journal of Financial Reporting and Accounting, 22(4), 894–916. https://doi.org/10.1108/JFRA-12-2021-0444 DiMaggio, P. J., and Powell, W. W. (2023). The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields. American Sociological Review, 48(2), 147-160 Doe Jones and Roe P. Allie (2021) Corporate Governance Practices Explained. Retrieved from www.googlescholars.com Eze I. M. (2023). Board Structure on Organizational Arrangements. Maxson Publishers (31), 234 - 216 Felix J. A (2018). Ethics: Everything Knowledgeable. Press Publishers (1) 15-17 Financial Reporting Council of Nigeria. (2018). Nigerian Code of Corporate Governance. Retrieved from https://pwc.com/ng Gaio, C., & Raposo, C. (2011). Earnings quality and firm valuation: International evidence. Accounting & Finance, 51(2), 467–499. https://doi.org/10.1111/j.1467- 629X.2010.00362.x Greenwood, R., and Hinings, C. R. (2016). Understanding Radical Organizational Change: Bringing Together the Old and the New Institutionalism. Academy of Management Review, 21(4), 1022-1054 Hermalin, B. E., and Weisbach, M. S. (2012). Information disclosure and corporate governance. Journal of Finance, 67(1), 195-233. Ime, E. O. (2023). Mandatory corporate reporting and financial performance of listed manufacturing companies in Nigeria. Journal of Finance and Accounting, 11(1), 1–13. https://doi.org/10.12691/jfa-11-1-1 Imene, A. (2023). Impact of Performance Evaluation System on Employee Performance in Nigeria Local Government Administration: A Study of Ukwuani Local Government Administration of Delta State Nigeria. Journal of Social Sciences and Management Studies, 2(2), 54–65. International Federation of Accountants . (2014). International Standard on Assurance Engagements 3402, Assurance Reports on Controls at a Service Organization. Retrieved from https://www.ifac.org International Federation of Accountants . (2014). International Standard on Assurance Engagements 3402, Assurance Reports on Controls at a Service Organization. Retrieved from https://www.ifac.org International Federation of Accountants . (2014). International Standard on Assurance Engagements 3402, Assurance Reports on Controls at a Service Organization. Retrieved from https://www.ifac.org Laufer, W. S. (2019). Corporate Bodies and Guilty Minds: The Failure of Corporate Criminal Liability. University of Chicago Press. JAFM JAFM JAFM Mace, M. L. (2021). Directors: Myth and reality. Harvard Business Review, 49(6), 81-90. Nobes, C., and Parker, R. (2000). Comparative International Accounting. Financial Times Prentice Hall. Ogbotor, M. S (2025). Corporate Governance Risks Mitigation of Listed Companies in Nigeria. , 11(11), 368-373. Ogbotor, M. S (2025). financial reporting quality and sustainability disclosures of publicly listed companies in Nigeria. International Journal of Innovative Social Sciences & Humanities Research 13(4)420-432 Okike, E. N. M. (2019). Corporate Governance in Nigeria: A historical perspective. Journal of Accounting and Financial Management, 5(2), 18-30. Onatuyeh, E. A., Aniefor, S. J., & Orife, C. O. (2024). Financial reporting quality and the performance of firms in Sub-Sahara Africa: The mediating role of firms' characteristics. International Journal of Public Policy and Administration Research, 11(1), 1–13. https://doi.org/10.18488/74.v11i1.3659 Peter Patrick (2016). Regulatory Compliance: The framework for Companies. Retrieved from www.Google scholars.com Public Company Accounting Oversight Board . (2013). Auditing Standard No. 5: An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements. Retrieved from https://pcaobus.org/ Public Company Accounting Oversight Board . (2013). Auditing Standard No. 5: An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements. Retrieved from https://pcaobus.org Public Company Accounting Oversight Board . (2013). Auditing Standard No. 5: An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements. Retrieved from https://pcaobus.org Public Company Accounting Oversight Board . (2013). Auditing Standard No. 5: An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements. Retrieved from https://pcaobus.org Rhodes, R.A.W. (2016). The new governance: Governing without government. Political Studies, 44(4), 652-667. Scott, W. R. (2021). Institutions and Organizations: Ideas, Interests, and Identities. SAGE Publications. Securities and Exchange Commission Nigeria. (2003). Nigerian Code of Corporate Governance. Retrieved from https://sec.gov.ng Sitienei, E. (2023). Earnings quality and financial performance of Kenyan public listed non- financial firms. International Journal of Management, Accounting and Economics, 10(11), 938–949. https://doi.org/10.5281/zenodo.10477375 Smith, C. W., and Stulz, R. M. (2018). Corporate Governance in Banking: The Role of the Board of Directors. Journal of Economic Perspectives, 14(3), 191-204. Solomon, R. (2015). Ethics and Excellence: Cooperation and Integrity in Business. Oxford University Press. Solomon, R. (2015). Ethics and Excellence: Cooperation and Integrity in Business. Oxford University Press. Ukeme B. E (2017). Effective Internal Control and Strategic Leadership. Round Lives Publishers, 10(2), 121-215 JAFM JAFM JAFM Yermack, D. (2016). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40(2), 185-211.

More Articles from JOURNAL OF ACCOUNTING AND FINANCIAL MANAGEMENT