Effect of financial derivatives on the performance of commercial banks in Nigeria
Chinedu John Uchechukwu; Regina G. Okafor
Afro-Asian J. of Finance and Accounting, Vol. 11, No. 6 (2021) pp. 834 - 860
This paper investigates the effect of financial derivatives on the performance of commercial banks in Nigeria. The study adopted derivative financial assets and derivative financial liabilities as independent variables, while earnings quality and sensitivity to market risk were adopted as dependent variables (measures of bank performance). The generalised least squares (GLS) panel regression analysis was employed to estimate the hypotheses formulated. Derivative financial assets were found to have a positive effect on earnings quality and a negative effect on sensitivity to market risk. On the other hand, derivative financial liabilities were found to have a negative effect on earnings quality and a positive effect on sensitivity to market risk. The study concluded that derivative financial assets tend to improve the performance of commercial banks in Nigeria and reduce their financial risk exposures than derivative financial liabilities.
Tag: Nigeria
Audit committee and financial reporting quality: the mediating effect of audit price in Nigeria
Audit committee and financial reporting quality: the mediating effect of audit price in Nigeria
Hussaini Bala; Noor Afza Amran; Hasnah Shaari
Afro-Asian J. of Finance and Accounting, Vol. 11, No. 2 (2021) pp. 167 - 197
This study examines the mediating effect of audit price on the link between the audit committee and financial reporting quality. The model was developed based on a complementary hypothesis and employs a panel dataset comprising 440 firm-year observations. We found that a larger audit committee comprising directors and shareholders is more likely to reduce earnings manipulation in the form of artificial smoothing and managers' discretion on earnings. The study also establishes that larger audit committee size is linked to an increase in audit price. Interestingly, we found that an increase in the price of auditing services minimises the likelihood of earnings manipulation. Also the audit price partially and significantly mediates the link between the audit committee and financial reporting quality. This study also informs regulators and policy makers of the importance of audit price in limiting earnings manipulation and boosting audit quality, which, in turn, enhances financial reporting quality.
Tax incentives and industrial productivity: evidence from Nigeria
Tax incentives and industrial productivity: evidence from Nigeria
Folarin Alayande
Afro-Asian J. of Finance and Accounting, Vol. 11, No. 1 (2021) pp. 151 - 165
This study investigates the relationship between tax incentives and industrial productivity in a protected industry. Based on available empirical literature, the nexus between tax incentives and direct investment, on one hand, and tax incentives and production volumes, has been largely established. However, the nexus between tax and within-sector productivity in a pioneer industry may vary across countries. Using data from Nigeria, the study examines the relative importance of tax amongst other industrial incentives in driving productivity within the cement industry. The findings show that while tax incentives may have improved production growth, it is not a significant driver of short-run productivity growth. Conversely, other non-tax incentives such as financing subsidies appear to have more impact on productivity. These findings provide new insight into the nexus between industrial policy incentives and productivity, and suggest that tax incentives may not be sufficient to drive the country's industrial agenda.
Infrastructure-FDI nexus in Nigeria: insights from nonlinear threshold regression model
Infrastructure-FDI nexus in Nigeria: insights from nonlinear threshold regression model
Md. Mahmudul Haque; Mohammad Ashraful Ferdous Chowdhury; Mohammad Hassan Shakil; Mansur Masih
Afro-Asian J. of Finance and Accounting, Vol. 11, No. 1 (2021) pp. 20 - 34
Infrastructural development of the host country is one of the major determinants of attracting FDI. However, the nonlinear threshold relationship between the infrastructural development and FDI inflow is yet to be explored. The objective of this research is to find the threshold effect of infrastructure on FDI in Nigeria. Using Hansen's (2000) threshold regression over the period 1972-2015, the study found that the relationship between infrastructure development and FDI is nonlinear. Furthermore, the relationship between infrastructure and FDI is positive in both regimes; however, the marginal positive impact of infrastructural development in attracting FDI is more evident after the threshold level. The findings provide support to the regulators and policy makers to improve infrastructural development for attracting more FDI in the economy which can foster economic growth.
Board attributes and voluntary disclosure in an emerging economy: evidence from Nigeria
Board attributes and voluntary disclosure in an emerging economy: evidence from Nigeria
Robert W. Odewale
Afro-Asian J. of Finance and Accounting, Vol. 10, No. 3 (2020) pp. 341 - 363
This study examines the effect of board attributes (board size, board composition and CEO duality) on the extent of voluntary disclosure using data for 237 firm-year observations from 75 firms listed on the Nigerian Stock Exchange from 2009 to 2012. The study constructs disclosure index score comprising 36 items. Using random-effects regression model, the result shows that CEO duality is negatively related to voluntary disclosure. This study also finds that board size and board composition do not have any significant relationship with voluntary disclosure. This study has implications for future researchers, regulators, and investors. Future researchers may find it interesting to examine board behaviour in order to understand the complexities of board operations as it affects their monitoring role. There is no evidence that the introduction of Corporate Governance Code by the Nigerian Securities and Exchange Commission has led to improvement in the voluntary disclosure made by listed companies. There is therefore the need for regulators to improve their enforcement and compliance mechanism at ensuring that listed companies comply with the disclosure requirements. It may also be appropriate that certain disclosures be made mandatory, since the management may not have the incentives to make such disclosures.