Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria
American Journal of Management Science and Engineering
Volume 2, Issue 4, July 2017, Pages: 58-64
Received: Jun. 28, 2017; Accepted: Jul. 14, 2017; Published: Aug. 15, 2017
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Authors
Clement Chiahemba Ajekwe, Department of Accounting, Benue State University, Makurdi, Nigeria
Adzor Ibiamke, Department of Accounting, Benue State University, Makurdi, Nigeria
Marie Fagson Silas, Internal Audit Department, Nasarawa State University, Keffi, Nigeria
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Abstract
The paper examines the impact of IFRS adoption on the use of loan loss provisions (LLPs) to manage earnings and capital by listed deposit money banks in Nigeria. The study employed an ex-post facto research design and a sample of fourteen (14) Deposit Money Banks listed on the Nigerian Stock Exchange. Data was obtained from 2009 to 2014 to capture the pre- and post- IFRS adoption periods. Using paired sample t-test, we find quantitative evidence to the effect that there are significant increase in the means of loan loss provisioning, and capital management by Deposit Money Banks in Nigeria in the post IFRS adoption period compared to the pre-IFRS adoption period. However, the levels of earnings smoothing are significantly lower in the post IFRS period. The implication of this finding is that adoption of IFRS improved earnings quality in the sense of reduced earnings smoothing.
Keywords
Earnings Smoothing, Capital Management, IFRS, Loan Loss Provision, Nigeria
To cite this article
Clement Chiahemba Ajekwe, Adzor Ibiamke, Marie Fagson Silas, Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria, American Journal of Management Science and Engineering. Vol. 2, No. 4, 2017, pp. 58-64. doi: 10.11648/j.ajmse.20170204.12
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Copyright © 2017 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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