EFFECT OF UNETHICAL ACCOUNTING PRACTICE ON FINANCIAL REPORTING QUALITY IN NIGERIA DEPOSIT MONEY BANKS

This study investigates the effect of unethical accounting practices on the financial reporting quality (FRQ) of Deposit Money Banks (DMBs) in Nigeria, with a view to identifying the prevalence, forms, and consequences of unethical practices such as earnings manipulation, asset overstatement, and concealment of liabilities. Specifically, the study examines: (i) the effect of unethical accounting practices on the relevance and faithful representation of financial reports; (ii) the relationship between earnings manipulation and the comparability and verifiability of financial statements; (iii) the moderating role of corporate governance mechanisms in mitigating unethical practices; and (iv) the influence of regulatory oversight and enforcement mechanisms on financial reporting integrity. The theoretical foundation of this study is grounded in Agency Theory and Stakeholder Theory, which emphasize the need for accountability and transparency in aligning the interests of management with those of shareholders and regulatory bodies. A descriptive and inferential research design was adopted, using a structured questionnaire administered to 340 accounting and finance professionals working across various Deposit Money Banks in Nigeria. Data analysis involved descriptive statistics, correlation analysis, and multiple linear regression using SPSS. The findings revealed that unethical accounting practices have a statistically significant and negative impact on financial reporting quality (β = -0.643, p < 0.01), particularly affecting the relevance and faithful representation of financial statements. Earnings manipulation was also found to significantly diminish comparability and verifiability (β = -0.552, p < 0.01). However, corporate governance mechanisms (β = 0.487, p < 0.01) and regulatory oversight (β = 0.352, p < 0.01) both exerted significant positive effects on mitigating unethical practices and enhancing reporting quality. The study concludes that unethical accounting practices undermine financial transparency, investor confidence, and institutional credibility in the banking sector. However, the presence of robust internal controls and strong external regulatory frameworks can counterbalance these risks and promote more accurate and reliable financial disclosures. The study recommends that DMBs reinforce ethical culture, strengthen board governance and internal audit systems, and that regulatory agencies intensify enforcement of existing accounting standards and corporate governance codes. By bridging a critical gap in the empirical literature using primary data from industry professionals, this study contributes valuable insights into the intersection of ethics, governance, and financial accountability in developing economies like Nigeria.