THE EFFECTS OF EARNINGS MANAGEMENT ON FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

This study examines the impact of earnings management on the financial performance of listed Deposit Money Banks (DMBs) in Nigeria. The analysis focused on three key variables: non-discretionary accruals, loan loss provisions, and accrual-based earnings, with net profit margin used as the performance measure. An ex-post facto research design was employed, using secondary data from the annual reports of five selected banks—FCMB, Union Bank, Zenith Bank, UBA, and Access Bank—for the period 2018–2022, yielding 25 firm-year observations. Multiple regression analysis was conducted with SPSS software to determine the relationship between earnings management and financial performance. The results revealed that non-discretionary accruals and accrual-based earnings positively and significantly affect net profit margin, while loan loss provisions have a significant negative impact. The model explained 77.8% of the variation in profitability, confirming that earnings management practices significantly influence financial performance. The study concludes that effective expense management and adherence to accrual accounting enhance profitability, while excessive loan loss provisions reduce it. It recommends stronger credit risk management and transparent accounting practices to improve financial performance and accountability in the Nigerian banking sector.