EFFECT OF CREDIT RISK MANAGEMENT ON MARKET PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 Background to the study

Banks and banking activities have evolved significantly through time and with the introduction of money. Financial services like deposit taking, lending money, currency exchange and money transfers became important due to the role being played by money, as no good financial system can do without well-structured and efficient financial institutions, specifically the banking industry. Banks had and still have an important role in the economy, by mediating between supply and demand of securities, and transforming short-term deposits into medium-term and long-term credits through credit creation. Through credit creation, deposit money banks are able to create new money through deposit multiplier effect and formed part of the main income generating activity of banks, though exposing them to credit risk (Kargi, 2011).

The Basel Committee on Banking Supervision (2001) defined credit risk as the possibility of losing the outstanding loan partially or totally, due to credit events (default risk) or the likelihood of losses when a borrower fails to repay a debt of any kind. Credit risk is an internal determinant of bank performance and the efficiency of the bank‟s performance is a function of how they are able to satisfy their customers at a minimum risk level and maximum profitability level. The higher the exposure of a bank to credit risk, the higher the tendency of the bank to experience financial crisis and vice-versa, thus necessitate its management.

According to Statement of Accounting Standards, credit risk management is the process of managing capital assets of banks and loss of loan reserves. These necessitate the appropriate management of the risks and serves as a key issue in reducing the earnings risk of banks and improving its value in the capital market. Nigeria deposit money banks has experienced high non-performing loans, low reserve for loan loss provisions, inadequate secured loans, loans and advances and low capital adequacy.

Credit risk is a serious threat to the performance of banks, as some of the reviewed studies showing a negative effect; therefore necessitate its management. Credit risk management provides a leading indicator of the quality of banks credit portfolio which is because it greatly influences or prevents the failure of a bank, as the failure of a bank is influenced to a large extent by the quality of credit decisions and thus the quality of the risk assets, which can be deterred as a result of poor corporate governance such as CEO duality etc.The importance of strong credit risk management for building quality loan portfolio is of paramount important to firm performance of deposit money banks as well as overall economy (Charles & Kenneth, 2013).

The growing stock of studies in accounting, finance and economics, underscores the failure in credit risk management as one of the main source of banking sector crises which possibly led to economic failure experienced in the past, including 2001 global financial crises (Fofack, 2005). Due to increasing spate of non-performing loans and its attendant consequences, the Central Bank authorities through its accords (Basel I and II) emphasized on the importance of capital adequacy for mitigating credit risk. Capital adequacy in banking business provides protection against sudden financial losses and serves as a distress prevention strategy (Greuning, 2003). The level of capital, a cushion to absorb credit and other losses, is matched to the portfolio risk depending on the risk characteristics of individual transactions, their concentration and correlation. All organizations, including banks, need to optimally allocate capital in relation tothe selective investments made. Hence, efficient tools and techniques for risk measurement are a key cornerstone of a good credit risk management

Other measures put in place in managing the risk associated with lending include making provisions to loans in case of loss or default in repayment, which could turn out to improve the firm performance of deposit money banks, most especially when specific assets are set aside for claims in terms of secured loans. In addition, when banks have adequate capital, it not only solves insolvency but also avoid the failure of the financial system.

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EFFECT OF CREDIT RISK MANAGEMENT ON MARKET PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

VALUE RELEVANCE OF INTERNATIONAL FINANCIAL REPORTING STANDARD ADOPTION IN NIGERIA FINANCIAL SERVICE FIRMS

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Accounting standards have changed greatly over the past decades with regard to the consistently increasing emphasis placed on measurement of assets base on fair valuation and pressing need for harmonization. However, in order to address the need of various users of financial information, locally formulated standards limit the ability to undertake cross boarder comparison. Therefore, the need for harmonizing of global financial accounting increased. The journey for the international harmonization toward a unique and global set of accounting standards started in 1973 when 16 professional accounting bodies agree to form the International Accounting Standard Committee (IASC).

The rationale behind the formation of the Committee was to produce and issue the International Accounting Standards (IAS) which came out of necessity to encourage growth in trade and investment between countries around the globe. The Committee was reorganized in 2001 to become International accounting Standard Board (IASB) which develops and issues International Financial Reporting Standards (IFRSs). Consensus has been reached that quality of accounting reporting is paramount to the information users for various decisions making purposes. IFRSs are increasingly becoming more acceptable set of regulations followed by many countries. In an effort to increase comparability, European Union mandated the adoption of IFRS to all its public entities in 2005. It is reported that more than 130 countries conformed to IFRSs as domestic reporting standards with 90 countries fully adopted (PWC, 2016).

Prior to international financial reporting standards, different countries develop their own standards locally and also to a certain extent adopt or adapt that of the other countries. In Nigeria, National Accounting Standard Board (NASB) develop and issue Statements of Accounting Standards (SAS) which are popularly known as Generally Accepted Accounting Principles (GAAP). These standards cut across various aspect of accounting activities such as recognition, measurements, and reporting of accounting transactions of various form of business activities. Therefore, SAS play a vital role in regulating the activities of accounting locallydue to the fact that financial reporting practicebefore IFRS depend on legal, economic, cultural and historical background of any country.

However, the major concern about the GAAP in several countries is that they are designed to reflect specific countries accounting needs, taken in to consideration different countries‟ regulatory and legal framework. Therefore, the need for globalization and growth of businesses brought difficulties in comparability and understandability of the local standards internationally. Also, the need to attract funds from the investors, creditors and financial institutions externally ignite the idea of accepting a common language for financial reporting in Nigeria so as to encourage international comparability. These and other issues pave the way toward harmonization of accounting standards and necessitate the need for a single set of high quality internationally generally accepted accounting standards (Ocansey, and Enahoro, 2014).

It is expected that adoption of IFRS would result in high quality reporting practice in Nigeria (Abiodun, 2012). The adoption of IFRS in Nigeria will lower the cost of capital and improve market liquidity (Leuz&Verrecchiia, 2010). Furthermore, IFRS adoption may encourage comparability and lower the cost of producing multiple financial reports to cater the need of cross-border investors in Nigeria (Okere, 2009). Similarly, the demands for functional financial institutions that would facilitate the development of stock market also encourage harmonization of financial reporting system. Financial sector is a driving sector of the economy; it contributes tremendously to the overall growth and development of stock markets (Mohammed & Lode, 2015).

Report on the Observance of Standard Codes (ROSC) in 2011 states that financial institutions in Nigeria do not provide full disclosure of accounting information as stipulated by the standards in their financial reports which was attributed to downturn in the Nigeria stock market and serve as a remote cause of the crises in the sector. As a result of this report and other reasons mentioned earlier, Nigerian government started IFRS adoption process by signing in to law, Financial Reporting Council (FRC) Act 2011 to replace the NASB Act 2004.

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VALUE RELEVANCE OF INTERNATIONAL FINANCIAL REPORTING STANDARD ADOPTION IN NIGERIA FINANCIAL SERVICE FIRMS

THE EFFECT OF FIRMS CHARACTERISTICS ON REAL EARNINGS MANAGEMENT IN THE LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1     Background to the study

Accounting information has been the major input in capital allocation decisions of investors and lenders in the capital markets. Specifically, accounting earnings remain the strategic financial statement variable for assessing firm‟s viability and future prospects. For accounting earnings to be useful and relevance to investors and lenders it has to be of higher quality, that is, free from errors and material misstatements. Accounting information particularly the “earnings” indicate firm‟s direction, reduces information asymmetry and ensures efficient capital allocation. This is achievable only if the managers did not interfere with the financial reporting process. The incidences of corporate failures that are related to creative accounting practices has raised concerns and remain a topical to researchers, regulators, standard setters, and investors in the 21st century and during the last two decades in particular. This rising concern among the stakeholders is not unrelated to some accounting practices that threaten the quality of corporate financial reporting and erode public confidence in the accounting profession. It also raised concerns about the reliability and credibility of financial reporting globally (Ge & Kim, 2013).

Corporate financial reporting is the management‟s responsibility, through which the managers communicate their stewardship performance to the owners and other stakeholders. Several researches on Capital Market are of the view that stock market responds favorably to earnings news when reported earnings meet or beat earnings expectations, while it reacts unfavorably when reported earnings fall short of earnings benchmarks. To avoid unfavorable reactions, managers have a tendency to avoid the release of bad earnings news at times of earnings announcements (Ge & Kim, 2013). As such managers can manipulate earnings through discretionary accounting choices (accrual-based earnings management) or by structuring real transactions and/or changing their timing (real earnings management). Earnings management is known in increasing information asymmetry between managers and outsiders and hide firm‟s unmanaged economic performance, thereby eroding financial reporting reliability and credibility. Bello (2011) argues that earnings management in whatever form is misrepresentation of true fact and figures of accounts which lead to a number of recent corporate collapses that erode shareholders confidence on the reported companies‟ financials. Moreover, Yero (2012) posits that, management report managed earnings to manipulate information asymmetry and misguide ill-equipped users.

There are many advantages attached for managing accounting earnings by corporate managers; for instance, managers might concentrate their efforts in tax planning to manage earnings and attempt to minimize the tax effects over time. Essentially, the conflict of interest between shareholders‟ and managers could encourage managers to use a certain degree of flexibility provided by accounting standards to manage earnings, and create distortions in the earning figures reported in the financial statements. This is in the corporate managers‟ efforts to influence short-term share price performance; or minimize earnings fluctuations in order to show better or more stable financial results.

The prevalence of corporate accounting scandals has changed the public perception of earnings management, as well as, the objective of corporate governance, which stop corporate managers from engaging in improper accounting activities for their own benefits. Financial reporting quality literature have documented a variety of accounting activities that manager‟s use whenever they engage in activities to manipulate earnings.

According to Gunny (2010) these activities include actions that managers may undertake to change the timing or structuring of an operation, investment and financial transactions. Specifically, Roychowdhury (2006) with regards real earnings management enumerated the management of sales, reduction of discretionary expenses, overproduction and reduction of R&D expenses. Though researchers especially in Nigeria ignored real earnings management, Kim and Sohn (2012) reveals that real-based earnings management has more damage than accrual-based earnings management, furthermore, it has both direct and indirect consequences on current and future cash flows of the business. They added that real earnings management activities are more difficult to be detected than accruals-based earnings management and are normally less subject to external monitoring and scrutiny. They also argue that real earnings management are more difficult for average investors to understand that make them into believing that business has achieved the targeted normal business goals.

Majority of the earnings management literature investigated how management used discretionary accruals to achieved desire earnings in a desired period. Therefore, the present study is motivated by the present research trend which less attention is giving toward investigating real earnings management. And also recent stakeholders concern about earnings management which is accepted by standard setters, practitioners and regulators, that earnings management can be detriment to corporate entities. As such, regulators and standard setters around the world have considered the extensiveness of earnings management to be a major concern for the reliability of published financial statements (Jiraporn, Young & Mathur 2008).

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THE EFFECT OF FIRMS CHARACTERISTICS ON REAL EARNINGS MANAGEMENT IN THE LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA

NEW PRODUCT DEVELOPMENT AS A STRATEGY FOR SALES GROWTH, PROFITABILITY AND COMPETITIVENESS IN UBA (NIGERIA) PLC

CHAPTER ONE:

INTRODUCTION

1.9        Background to the Study

In Nigeria, the banking industry has been experiencing cyclical movements in its development patterns right from independence in 1960 to date. As a result of the importance of the banking industry in the economic development of the country, successive governments in the nation came up with different policies, programmes, regulations and strategies in the form of financial guidelines with the aim of improving the performance of the industry. These guidelines include: regulation, deregulation, liberalization, globalization, paging of interest rate, consolidation and the like.

In essence, the relevance of any business organization lies in its ability to develop new product in line with the needs, wants, interests and or aspirations of the society or community within which it operates. However, changes in the consumer taste, preferences and aspiration, as well as technological innovations, open market economy, challenges of globalization coupled with the new banking consolidation policy aimed at sanitizing the fragmented and crowed banking industry in the country, have brought in discipline and orderliness in the sector. However, there is no guarantee that a successful product today will remain relevant or success in the near future.

However, with deregulation and liberalization policies, the central bank of Nigeria was able to reduce the number of small indigenous banks from 89 to about 25 mega-sized banks, solely to provide a wide range of new product lines, including retail and whole sale banking as well as project financing and other investment services. With stiff competition in the industry, banks must do their best to meet the challenges; hence they must come up with projects or programme that includes: researching new products and or services in order to prosper because it is risky for banks to rely only on their existing products in the face of ever changing technological innovations.

Despite all the financial regulations and policies in the industry, its performance or contributions to the economy and customer satisfaction is still quite discouraging and for banks to grow, they must, from time to time, produce new products that lead to customer satisfaction vis-à-vis huge profit attainment within the industry. Sanusi, (2010) gave five measures of enhancing quality of banking in Nigeria. These measures are industry remedial programmes to fix the key causes of the crises; implementation of risk based supervision; reforms to regulation and regulatory frame work; enhancing provision for consumer protection; and internal transformation of Central Bank of Nigeria (CBN).

The survival and growth of commercial banks in Nigeria depend solely on their ability to develop new product and or service in order to cope with the global market challenges, but in the process, care must be taken in order to avoid producing “dogs” which are neither profitable nor satisfying customer needs.

1.10     Statement of the Problem

The introduction of Structural Adjustment Programme (SAP) in 1986 led to the proliferation many of commercial banks in Nigeria. As pointed by Nigerian Deposit Insurance Corporation (2009) that by then there were 89 active banks. The presence of these banks led to intense competition among different banks within the industry (both old and new generation ones). Also with the coming of the new generation banks into the scene, their new and sophisticated products posed a challenge for the old generation banks to adopt to new banking method in order to survive and grow in the new competitive environment.

Competition in the industry makes the old system of “Arm-Chair” banking impossible where bankers normally sit waiting for customers to come. For banks to survive now, they must embrace the “principles of marketing” if at all they want to survive and remain relevant in industry. They must encourage, persuade, motivate, attract and influence both existing and potential customers. They must engage into different promotional efforts such as personal selling, advertising, sales promotion, publicity, mass selling, public relation, branding, packaging and offer variety of products in order to capture large share of the market.

As a result of severe competition, marketing is currently occupying a prominent position in the Nigerian commercial banks where every banker is a “marketer”. This is the reason that led this study of the Assessment of New product development as a strategy for sales growth in UBA Plc, with the aim of finding out how new product development may lead to sales growth in the banking industry of Nigeria by taking UBA (Nigeria) Plc as a case.

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NEW PRODUCT DEVELOPMENT AS A STRATEGY FOR SALES GROWTH, PROFITABILITY AND COMPETITIVENESS IN UBA (NIGERIA) PLC

IMPACT OF FINANCIAL LEVERAGE AND DIVIDEND POLICY ON SHARE VALUE OF QUOTED OIL AND GAS COMPANIES IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The primary objective of every rational investor be it an institutional investor or individual investor,is to maximize expected returns on their investments within an acceptable level of risk. Thus, they prefer to invest their funds in shares of companies with increasing prices that will eventually boost their wealth in the stock market. Generally, most investors prefer persistent increase in the value of their shares in the stock market in order to earn more return on their investments and maximize their wealth.

However, in practice, the prices of stocks do not increase at all times in the stock market. They could fluctuate and perhaps result in losses that could be detrimental to the shareholders’ wealth. Therefore, the players in the financial market usually find it difficult to obtain reliable information on market values of shares as these values fluctuate quite frequently (Pandey, 2003). This fluctuation in the share values of companies at the stock market has been a matter of great concern to investors, fund managers and investment analysts globally and has attracted debates from financial economists, corporate finance experts and scholars over the years (Almumani, 2014).

Limento and Djuaeriah (2013), Gharaibeh (2015) and Aliyu (2015) contend that macroeconomic factors such as interest rate, gross domestic product, inflation rate, money supply, and risk free rate also cause movement in the share prices of companies in the stock market. On the other hand, it has also been argued that share value could be influenced by microeconomic variables like dividend per share, dividend payout, return on equity, earnings per share, book value per share, price earnings ratio, profitability, firm size, and leverage (Stephen &Okoro, 2014, Taimur, Harsh, &Rekta, 2015, Zeeshan, Ali, Sohail&Sulaiman, 2015 and Adenugba, Ige&Kesinro, 2016).

It has been seen in many studies that the share price of a company is influenced by financial leverage. For example, Buigut, Soi, Koskei and Kibet (2013) contend that the ratio of total debt to total capital is one of the major factors causing movement in the share value of a company. In the same vein, it has been argued by Hussain and Gul (2011) that the company’s share price is affected by its interest coverage ratio as investors perceive the company’s ability to cover its interest charges from profit as an indication that the company is profitable.

Similarly, scholars like AlTroudi and Milhen (2013) and Stephen and Okoro (2014) are of the view that the firm’s share price is strongly influenced by the retained earnings ratio. They further posit that investors prefer companies that retain their earnings for business growth rather than paying dividends. Conversely, Majanga (2015) asserts that dividend coverage ratio is one of the factors that cause fluctuation in the share value of a company. He added that investors prefer to invest their funds in shares of companies that pay dividends.

Therefore, a critical analysis of these factors gives the investors insight knowledge on whether the share price of a company is undervalued or overvalued in stock market at a particular point in time. An understanding of the impact of various fundamental variables on share price by investors helps them in making informed investment decisions(Srinivasan, 2013). However, the dynamic nature of the stock market and conflicting views held by scholars in the literature as regard the factors influencing Share price and persistent fluctuation in the prices of shares is still a crucial issue facing investors, fund managers and investment analysts in the financial market (Malhorta and Tandon, 2013) and (Almumani, 2014). These also pose a challenge making the task of identifying those fundamental factors that could cause changes in the share value and predicting future prices of shares complex.

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IMPACT OF FINANCIAL LEVERAGE AND DIVIDEND POLICY ON SHARE VALUE OF QUOTED OIL AND GAS COMPANIES IN NIGERIA

FINANCIAL PERFORMANCE AND FIRM CHARACTERISTICS OFNON-FINANCIAL QUOTED COMPANIES IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1         Background to the Study

In corporate finance, the issue of funding has been given much prominence in the activities of the firm. Corporate financing is a global issue because without proper financing, organisations, globally, will find difficulty in conducting their businesses. Almeida and Campello (2010) stated that corporate managers in Europe and the United States have always claimed that maintaining „financial flexibility‟ is the primary objective of their firm‟s policies. Financial flexibility ensures the continued running of operations of an organisation; it brings sustainability, and continued growth for the firm, which is expected to create wealth and add value to shareholders and stakeholders of the organisation. Thus, funding is therefore very essential for the survival of a firm.

It is part of a mandatory role for companies in Nigeria to finance their businesses so that they may be able to add value, remain in business and grow over time. Once businesses are in operation, the general expectations are that profits will be generated which in turn would lead to the creation of wealth to both the shareholders and the organisation. The returns made are expected to be paid to the shareholders in the form of dividends. The continued existence of the business allows employment to be created and employees to be paid salaries thereby improving the standard of living of people. In addition, revenues to be generated for the government through taxes and levies, which if fully utilised effectively the stakeholders to also benefit both socially and economically. All these are expected to reduce the level of poverty in the country, create wealth for the economy, and increase economic growth and development for the country.

Corporate financing decisions can be a complex process and existing theories can at best explain only certain features of how diverse and complex financing choices can be. The complexity of the financing decisions resulted to the choices of determining which financing structure to adopt for the organisation and financing structure decisions informed the issue of firm characteristics. Characteristics of the firm consists of the combinations of debt, equity, fixed assets,total assets and turnover, which are used in financing decisions to bring about an optimum performance and firm value.

The relationship between financial performance of the firm and firm characteristics is a subject of considerable debate both theoretically and in empirical literature. An optimal characteristic is expected to achieve maximum firm value or market value, increase in profitability, decrease in risk, and lower the weighted average cost of capital. It therefore becomes a concern if organisations are unable to achieve maximum financial performance through optimum firm characteristics.

Arguments have been made on characteristics and how the financial performances of firms are affected. Area of conflict lies on which financing policy to adopt. Where the firm is heavily financed by debt, interest will be paid by the organisation which reduces the profit of the firm, dividends and also retained earnings. With fewer retained earnings, the firm will have fewer funds for investment and may decide to restructure and use more of internal financing. This is informed by the pecking order theory of capital structure as pioneered by (Myers, 1984). Another argument informed by Miller and Modigliani, (1958) is that capital structure has no relevance in determining the financial performance of the company, that performance is determined by factors none other than debt or equity.

The corporate sector in Nigeria is made up of firms operating in a competitive environment and this free market coupled with the widening and deepening of the financial markets created a basis for companies to optimally determine their characteristics. Salawu and Agboola, (2008) explained that financial freedom of Nigerian companies can be traced to as far back as 1987 when financial liberalisation gave more flexibility to the Nigerian financial managers in choosing the firm‟s characteristics. Despite this flexibility, finance is still a major constraint to businesses in Nigeria and with the lack of sufficient funds for operations, coupled with low levels of investment capital recorded in recent years have result in low capacity utilization of industries, thus affecting corporate performance.

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FINANCIAL PERFORMANCE AND FIRM CHARACTERISTICS OFNON-FINANCIAL QUOTED COMPANIES IN NIGERIA

EVALUATION OF THE IMPACT OF ECONOMIC EMPOWERMENT AND DEVELOPMENT STRATEGY ON POVERTY ALLEVIATION IN TARABA STATE

CHAPTER ONE

INTRODUCTION

1.1.1     Background to the Study

Poverty is a global problem found in different parts of the world albeit with different causes and at various levels; which gives rise to various approaches to poverty alleviation strategies that depend on each country‟s antecedents. Whereas poverty in the United States is seen as a result of failings at the structural, social and economic level (Rank, 2003), it is seen in most African nations as caused by low level of production and production capacity, most especially in the agricultural sector which accounts for most of the employment and a large share of the GDP (Ibrahim, Mahmood and Umar, 2011).

Nigeria is the most populous African country; it has a high poverty rate of 69% in 2013 and rising unemployment rate of 19.7 in 2009, 21.5 in 2010, 23.9% in 2011 and 24.3 in 2014(NBS, 2014). The North East geo-political zone to which Taraba state belongs, has 69% poverty rate as at 2010 (see appendix 4) which makes the zone second only to the north central zone that has 70% rate (Aiyedogbon and Owhofasa, 2012). Nigeria is the 152nd country on the Human Development Index in 2014 and the 22nd in Africa, far below Ghana, Sao Tome and Equatorial Guinea, who are ranked 13th 16th and 17th respectively (HDI, 2014).

In order to alleviate poverty, Nigeria embarked on economic empowerment programs from the 1970‟s. These include the Green Revolution, Operation Feed the Nation (OFN), Nigerian Agricultural, Cooperatives and Rural Development Bank, (NACRDB) (now Bank of Agriculture, BOA), National Directorate for Employment (NDE), Poverty Alleviation Program (PAP), National Poverty Eradication Program (NAPEP), the Directorate of Food, Roads and Rural Infrastructure (DFRRI), and National Economic Empowerment and Development Strategy (NEEDS), all in an effort to alleviate poverty and its attendant consequences.

Economic empowerment and development program was born out of the dire need to stop the ravages of poverty and enhance the welfare of the people by the government. The global summits of world leaders that have a direct bearing on poverty alleviation was the millennium summit of 2000, it brought together 189 Heads of States who undertook to execute the time bound Millennium Development Goals (MDGs). These nations committed themselves to, among other targets, cut by half the number of people living in hunger and poverty by the year 2015.

Nigeria was among the 189 signatories at the convention; and in order to meet the target; it came up with a milestone in the form of National Economic Empowerment and Development Strategy (NEEDS) which gave rise to the state Economic Empowerment and Development Strategy (SEEDS) at the state level, as well as the Local Economic Empowerment and Development Strategy at the Local Government level. The Local Economic Empowerment and Development Strategy (LEEDS) operate within the framework of NEEDS and SEEDS in all the LGAs in Nigeria. Its aim was to promote poverty alleviation and general development at the grassroots level, involving key stakeholders such as local government officials, civil society groups, private sector participants, community leaders, traditional rulers, women and youths, in the process of development at the local government level (TSEEDS, 2004).

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EVALUATION OF THE IMPACT OF ECONOMIC EMPOWERMENT AND DEVELOPMENT STRATEGY ON POVERTY ALLEVIATION IN TARABA STATE

EFFECT OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) ON TAX ADMINISTRATION IN FEDERAL INLAND REVENUE SERVICE

CHAPTER ONE

INTRODUCTION

1.1         Background to the Study

In recent times, the incessant militancy in the Niger Delta and falling global price of crude oil and oil revenue shifted the attention of the government and major stakeholders in Nigeria to other sources of revenue generation. One of the ways the government generates revenue is through taxation. Taxation is a system used to raise money for the purpose of government by means of contributions by individual persons or corporate bodies. Tax administration therefore involves all the principles and strategies adopted by any government in order to plan, impose, collect, account, control and coordinate the process of taxation (Ogbonna 2010).

Again, Governments and organizations worldwide are increasingly recognizing the need to facilitate access to public services through information exchange using Information and Communications Technology (ICT).The role of information and communication Technology (ICT) has been growing in the economic and social life in the 21st century. It is now a fact as evidenced by developments from many countries that ICT as a sector can contribute greatly to the national GDP of a nation and that ICT, acting as an enabler, can result in improved market competitiveness of a nation‟s products and services (Uvaneswaran & Mellese,2016). ICT can impact positively on governance and other sectors of the economy.

It can effectively assist international economic integration, improve living standards, narrow the digital divide and improve biodiversity utilization and management. According to Adamu (2001), Information and communication technology (ICT) has become very important to national growth and development. The adoption of ICT requires a business environment encouraging open competition, trust and security, interoperability and standardization and financial resources (Uvaneswaran &Mellese,2016). This requires the implementation of sustainable measures to improve access to the Internet and telecommunications infrastructure and increase ICT literacy, as well as development of local Internet-based content. Thus, ICT has been employed in many sectors of the Nigerian economy such as pensions, land registry, security administration, public financial management and tax administration.

Information and communication technology involves sending and receiving messages through electronic devices such as web portals, internet, inters witch, telnet and telecommunication. The recent globalization of information and communication technology has made business organizations, companies, individuals and government parastatals change from the manual way of communication to electronic means. With the advent of information and communication technology, it became imperative for tax administrators to take advantage of the emerging capabilities created by Information and Communication Technology to enhance tax administration. With the expansion in scope of operations and growth of businesses in the Nigerian economy, the Nigerian tax system embarked on several reforms geared towards enhancing tax administration.

Some of the reforms include organizational restructuring of the Federal and State authorities, the enactment of a National Tax policy, reforms in funding, legislation, tax payer education, human capacity building and automation of Tax administration. In its bid to simplify and ease tax payment process and increase revenue generation, the Federal Inland Revenue Service (FIRS) launched the electronic filing (e-filing) platform. Prior to automation of tax administration, there used to be a time when payment of tax was diverted or converted at the collecting banks, reconciliation of accounts took an inordinate amount of time due to manual processes and a time when taxpayers had to carry enormous amounts of cash in order to fulfil their tax obligations (Usman 2013).

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EFFECT OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) ON TAX ADMINISTRATION IN FEDERAL INLAND REVENUE SERVICE

EFFECT OF FIRM CHARACTERISTICS ON THE FINANCIAL PERFORMANCE OF PENSION FUNDS ADMINISTRATORS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

Many countries around the globe including Nigeria have experienced rapid establishment and growth of pension funds. The growth of these institutions is one development that countries have given considerable attention because of the sensitivity of the transactions involved in pension funds. Pension funds act as an important stimulus to capital markets in most countries where they exist through financial intermediation. They tend to complement, and hence stimulate development of capital markets, while acting as substitutes for banks. Their growth is also the consequence of a number of non-financial and demand-side features (Davis, 2000).

The need for better managed pension funds in many countries was necessitated by the growing population which in many cases translated to high rate of employment around the world. Also, most countries are experiencing increasing longevity in life expectancy and reduced fertility rates that seem to threaten the sustainability of the traditional pay-as-you-go pension systems. The pension contributions from the working population will not be sufficient to support the elderly. In response, countries are increasingly shifting their pension systems toward partial or full funding. In addition to the main purpose of coping with demographic pressures and unsustainable fiscal positions, other motivations for countries to reform their pension systems often include the hope that funded pensions will contribute to economic development by promoting national savings and capital market development (Meng & Pfau, 2010).

It is only natural for the state to make provision for the welfare of the aged especially as they engage most of their active, useful and youthful stage in life to the service of the nation state. The need to cater for the well-being of retirees after disengagement from their occupations

informed the basis of a gradual contribution that are accumulated and provided in lump-sum to the retired so as to sustain life to the end. In this regards, government has imposed pension laws to assist employees and the economy at large. The dual contributions of the concerned parties which are made on monthly basis accumulates to a huge sum of money that can be invested for future use, fruitful yields and also the growth of the economy. Thus specialized professionals are engaged to manage these funds through specialized institutions that are basically concerned with retirement related savings.

Pension funds perform diverse activities that are beneficial to both individuals and the economy at large. For instance, the funds induce capital and financial market development through their substituting and complementary roles with other financial institutions, specifically commercial and investment banks. As competing intermediaries for household savings and corporate financing (Impavido, Musalem, & Tressel, 2002), pension funds foster competition and may improve the efficiency of the loan and primary securities markets. This results in a lower spread between lending rates and deposit rates, and lower costs to access capital markets. On the other hand, Davis (2005) argues that pension funds may complement banks by purchasing long-term debt securities or investing in long-term bank deposits. Other potential impacts from the growth of pension funds include an inducement toward financial innovation, improvement in financial regulations and corporate governance, modernization in the infrastructure of securities markets, and an overall improvement in financial market efficiency and transparency (Davis, 2005). Such impacts should ultimately spur higher long-term economic growth.

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EFFECT OF FIRM CHARACTERISTICS ON THE FINANCIAL PERFORMANCE OF PENSION FUNDS ADMINISTRATORS IN NIGERIA

EFFECT OF FIRM CHARACTERISTICS ON SOCIAL AND ENVIRONMENTAL ACCOUNTING DISCLOSURE IN LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1         Background to the Study

The need for corporate organizations to disclose in their annual report the social and environmental accounting information is increasingly becoming a topical issue globally. This need is even more apparent in the developed nations, unlike in developing countries where less attention is being given to social and environmental accounting issues. The emergence and increasing interest in social and environmental accounting disclosure reflects the increasing demand for transparency and accountability from corporate organization. This less attention might not be unconnected with the general notion that, an organization‟s primary objective is to maximize profit without taking into cognisance the effect of their activities in the society where they operate.

The traditional view of a „good‟ business manager or an entrepreneur in a capitalist society as opined by Idowu (2012) is that he is an individual capable of generating profits regardless of the effect of his actions on jobs, the environment and local, national and international communities, provided no law is broken in the course of these actions. So, the main concern here is about how efficient organizations are in terms of how much profit are made and how much dividends are paid. No serious attention is given to social and environmental accounting information in the annual reports.

Despite industrialization plays important role towards achieving meaningful economic development of a nation, it has been observed by Uwuigbe (2012) that economic development is associated with social and environmental related problems such as global warming, environmental degradation, accusation and counter accusations of unfair treatment of host communities and pollution among others. Therefore, it is imperative for firms to behave in a responsive manner to social and environmental issues parallel to economic issues. One of the ways of achieving that by the organizations is through increase in the level of disclosure on social and environmental accounting related issues in the annual reports over and above regulatory requirements.

The extent of disclosure of social and environmental accounting information in the annual reports at company level is determined according to two dimensions; the extent of social pressure that face each company and the strategy adopted by each company in curving this pressure Hassan (2010). He further posited that, the interaction between corporate characteristics and media coverage of the company determine the degree of social pressure facing a company, while corporate governance mechanisms determine how each company responses to such pressure. Generally, studies on determinants of corporate social and environmental disclosure have been primarily concerned with the influence of firm characteristics such as firm size, profitability, leverage and size of audit firms while little attention was given to corporate governance attributes which is considered as a good explanatory variable that might influence firms to voluntarily disclose social and environmental information in the annual reports (Susi, 2005; Echave & Bhati, 2010).

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EFFECT OF FIRM CHARACTERISTICS ON SOCIAL AND ENVIRONMENTAL ACCOUNTING DISCLOSURE IN LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA

EFFECT OF CORPORATE GOVERNANCE MECHANISMS ON TAX AVOIDANCE IN DEPOSIT MONEY BANKS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Taxes are a fundamental revenue source for governments the world over. They represent a recognized compulsory contribution by individuals and corporate entities towards governance, development and maintenance of physical infrastructure as well as a tool of bridging income inequities. They are also a means by which the social contract between the State and the citizenry is being nourished and facilitated (Christensen & Murphy, 2004). Taxes also happen to be the most important, sustainable and predictable source of public finance for almost all countries (Action Aid, 2013). Thus properly harnessing amounts collected via taxes is a major concern for governments.

In assessing the extent to which a country has harnessed and financed its economy through taxation, an often used measure is the tax to GDP ratio. Scholars have however noted that the tax to GDP ratio for the developing world as a whole is relatively low when compared to what obtains in the developed economies. For instance, according to Fuest and Riedel (2009) the tax to GDP ratio for developing economies was on average approximately 12-15% as at 2005. Conversely, for the developed economies, the average for the same year was quoted as approximately 35%; a figure more than twice what obtained in the developing climes. More recent reports show some improvement in the ratio but given the potential the region has for increased tax revenue, the improvement has not been found to be impressive. For instance, a report by the International Tax Compact, ITC (2010), noted that while tax revenues in Organization for Economic Cooperation and Development (OECD) countries amounted to almost 36% of gross national income in 2007, the share in selected developing regions was estimated to be around 23% for Africa (in 2007) and 17.5% for Latin America (in 2004).

Specifically focusing on Nigeria, as at January 2014, tax revenue to GDP ratio stood at 20% (Premium Times, 2014). However with the rebasing of Nigeria‟s GDP in 2014, which saw the country‟s GDP increase from N42.3 trillion to N80.3 trillion, making Nigeria Africa‟s largest economy, Nigeria‟s tax revenue to GDP ratio fell from 20 % to 12 %. Out of the said 12 %, only 4% was attributable to non-oil revenue. This led to a call by the then Minister of finance on the need for the taxing authorities to redouble their revenue generation efforts (Premium Times, 2014). This call by the minister as well as the assertion by Oxfam (2014) that widening income disparities are the second greatest worldwide risk in 2014, underscore the need to look deeper into the various sources of development finance, especially taxation. The highly volatile nature of oil revenue- which the Nigerian economy depends on to a large extent should, arguably, also serve as an added impetus towards looking for ways to better harness other revenue sources such as taxes.

In exploring how to better harness tax revenues, it has been documented world over that, two major activities; perpetrated by both individuals and corporations, have continued to represent a great threat to amounts of revenue collected through taxes. In addition, the said issues feature prominently in equity and efficiency related discourse. The duo of issues are tax evasion and tax avoidance. While both are aspects of tax non-compliance, the delineating feature between the two lies in the fact that tax evasion is deemed out rightly illegal while by definition tax avoidance is not. However notwithstanding the delineating line between the two, in advanced economies, the duo have been given serious consideration by their governments, through the relevant agencies. Furthermore, the two issues have sparked much research; ranging from investigating their determinants- both for individuals and for corporations examinations of the attendant consequences engendered by their continued flourish.

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EFFECT OF CORPORATE GOVERNANCE MECHANISMS ON TAX AVOIDANCE IN DEPOSIT MONEY BANKS IN NIGERIA

EFFECT OF AUDIT COMMITTEE CHARACTERISTICS ON FINANCIAL REPORTING QUALITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

Corporate financial report provides fundamental information to a wide range of groups; its main purpose is to provide information which is supposed to give a true and fair view of the management’s stewardship, company’s performance and financial position for the various users of the information to make informed economic decisions (America Accounting Association, 1961). Financial reporting is the process by which corporate entities provide interested parties (users) with information on their transactions during an accounting period (Mbobo & Ekpo, 2016). Among the interested parties are shareholders, creditors, tax authorities, customers, financial analysts, and lenders. The parties need quality financial reports for economic decision making.

Financial report is one of the major means that corporate management uses in communicating financial information for a given period. In this regard, the International Accounting Standard (IAS 1) states that the purpose of financial reporting is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. Such information is communicated through financial statements. Ibadin and Dabor (2015) stated that financial statements show the results of the management’s stewardship of the resources entrusted to it by revealing economic information on assets, liabilities, equity, income and expenses, including gains and losses; contributions by and distributions to owners in their capacity as owners; and cash flows. Such information, along with
other information in the notes, assists users of financial statements in predicting the entity’s future cash flows and, in particular, their timing.

Moreover, accounting information contained in the financial statements is one of the very essential information needed by various stakeholders especially investors for making informed economic decisions. Investors in search of investment avenues use the accounting information contained in the financial statements of the intended investing company in pricing of shares. Market participants seek high-quality financial reporting or information to mitigate information asymmetry as such quality information should be a pre-requisite for a well-functioning capital market. Thus, companies that provide high-quality information have an added advantage in their rating in the capital market (Ibadin & Dabor, 2015).

The increasing demand for quality financial reporting creates the need for effective and efficient monitoring mechanisms. This is necessitated by the conflict of interest between managers, who serve as agents and resource holders, who serve as principals, wherein, managers carry out activities that are counter-productive in the realization of the interests of resource holders. Therefore, board of directors is instituted to monitor the activities of managers. The board sets several monitoring measures that will ensure the integrity of management’s decision. One of committees is the audit committee. The quality of the monitoring process depends on effectiveness of the audit committee. The effectiveness of audit committee in exercising its monitoring role is defined as the extent to which they perform their duties which is associated with their characteristics (Dechow, Sloan & Sweeney, 1996; Beasley, 1996; Carcello & Neal, 2000; Klein, 2002). An effective audit committee ensures the provision of credible accounting information to financial statement users by constraining earnings management by managers (Dandago & Rufai, 2014).

It is in line with increasing loss of credibility of financial reports that the banking industry, through the Central Bank of Nigeria also developed its code, the recent of which is the CBN Code of Corporate Governance of 2006 (Ibadin & Dabor, 2015). Specifically, the code requires that companies should establish audit committees consisting of directors and shareholders. Under the code, audit committee is saddled with the responsibility of reviewing the scope and result of audit, the independence and objectivity of the auditor, among others. In spite of this, the quality of financial reports of banks has continued to be an issue of concern.

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EFFECT OF AUDIT COMMITTEE CHARACTERISTICS ON FINANCIAL REPORTING QUALITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

DETERMINANTS OF SHAREHOLDERS’ VALUE OF LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1                 Background to the Study

Public companies typically have ownership divested from management (Mullins and Christy, 2013). The owners of the companies (called shareholders) vest their management of the firm in the hands of management team (called the Board of directors), with the expectation and understanding that the Directors will run the company in such a manner that value is created for the owners. A firm’s management creates value for shareholders if the Market Value(MV) of ordinary shares surpasses the par or Book Value (BV) of ordinary shares (that is, MV is greater than BV), but destroys value if MV is less than BV and maintains value if MV equals to BV (Pandey, 2002 and Akinsulire, 2010).

The fiduciary duty which devolves upon the management of the firm requires that management should have a thorough understanding of the dynamics of underlying factors which may create or destroy value for owners, as such, the subject of value creation is too critical and important not to be ignored by any management seeking to fulfill its fiduciary duties. The theory of shareholder value, traditionally suggests that every company’s primary goal is to maximize the wealth of its shareholders (Jensen, 2002; Pandey, 2005; Chikwendu, 2009; and Madan, 2013). Considering that stakeholders (including shareholders) are increasingly holding management to greater accountability by requiring the latter (management) to demonstrate how they are creating value (CIMA, 2014), the shareholders’ value creation discourse has become very vital.

In spite of the vast number of studies conducted in foreign countries related to shareholders’ value, the debate as to the factors determining value creation is unsettled; this is evidenced by the number of studies that have been carried out on the subject in different parts of the world. The identification of financial factors which have the highest impact on value creation in a business can facilitate establishment of criteria for appropriate strategies selection in that direction (Marangu & Ambrose, 2014).

Finance theory contends that the ultimate goal of a company is to maximize shareholder wealth (Jensen, 2002 and Madan, 2013) this is because shareholders provide funds to the company. This means that the shareholders’ wealth will be reflected in the value of the company, which is indicated by the relevant company’s share price on the stock market. Shareholder wealth maximization as the goal of the company will facilitate the measurement of the performance of a company. If the stock price of a company shows an increasing trend in the long run, it indicates that the shareholders’ value created is good.

Besides stock market price, shareholders usually see the company’s success by its financial performance. The common question asked by the shareholders is, how does management generate adequate profits on the company’s assets? How does the company finance its assets? In this respect, Van and Wachowicz (2008) contend that profitability ratio is a popular determinants of the shareholders’ value creation (company’s performance).

The ability of a firm to create value by paying out dividend to its shareholders depends on its ability to generate cash from its operating activities and access of additional funds through external financing (Vazakidis and Adamopoulos, 2009). The shareholder returns basically depends on prices, costs, investments, volume of products sold and riskiness of firms in an industry (Osinubi and Amaghionyeodiwe, 2003; Soyede, 2005). The variables representing these factors can be considered as determinants of shareholders’ value. Working capital and fixed capital investment are the two components of investment value drivers (Rajesh, 2015). Management’s investment choices and financial policy are also value drivers in the context of riskiness of cash flows for the company (Olokoyo, Oyewo and Babajide, 2014)

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DETERMINANTS OF SHAREHOLDERS’ VALUE OF LISTED INDUSTRIAL GOODS FIRMS IN NIGERIA

DETERMINANTS OF BOOK-KEEPING PRACTICES OF SELECTED SMALL AND MEDIUM ENTERPRISES

CHAPTER ONE

INTRODUCITION

1.1 Background to the Study

Small and Medium Enterprises (hence forth, SMEs) have significant role in the economic development of emerging economies Nigeria inclusive. With just a little investment, they are important contributors to the achievement of general business growth and employment in the economy. According to Kadiri (2012), SMEs in both the formal and informal sector of Nigeria employ over 60% of the labour force. More so, 70% to 80% of the daily basic necessities in the country which are not high-tech products but basic materials produced with little or no mechanization, also come from SMEs (Peterise (2003) as cited in Kadiri (2012)).

SMEs started to gain recognition in Nigeria in the early 1970s after the oil boom (Osotimehim and Jegede, 2012). This recognition started from small agricultural holdings but now extended into different kinds of services such as food processing and restaurant business, retail and wholesale of phones and computer software, metal and furniture assembling, sachet water business, soap and room freshener, tailoring and fashion designing, printing press, making of blocks, among others.

The capacity, experience and organizational abilities of SMEs as entrepreneurs are central to the success of their businesses. The interest on SMEs entrepreneurial capacity has acquired its intensive level almost everywhere in the world. In the developed economies SMEs are viewed as a revitalizing socioeconomic agent, a way of coping with unemployment problems, a potential catalyst and incubator for technological progress, product and market innovation. In most of the developing countries also, SMEs act as catalysts of economic activity in general, and business performance in particular through their roles of job creation and social adjustment.

Performance of a business, that is, how well or poorly a business is doing vis-à-vis owner-manager objectives is crucial to its success. One important way good business performance is reported, is through effective and efficient record keeping. When a business is not performing well, certain danger signals such as systematic capital erosion through, say, personal drawings and/or poor profitability, will exhibit themselves and are only detectable if there are up-to-date financial records. Most business owners that do not have adequate or standard Book-Keeping system would not be able to track the signals for these warnings and may tend to optimistically believe that things are getting better in the business flow.

Book-keeping is of central importance to any business, be it large or small. Entrepreneurial qualities are evidently established in organized businesses largely through their ability to organize their financial records. Adequate book-keeping practices are in maintaining accurate set of accounting books delineating assets, liabilities and income structures. This is necessary for every business if it is to take any vital business decisions and be able to ascertain how much profit the business is making.

The double entry system of record keeping is the standard way to record financial transactions in business. Every entry involves both debit and credit transaction, which is the basic rule for any accounting practise. That is, for every debit entry there must be a corresponding credit entry and vice visa. It involves the use of journals and ledgers to keep track of profit and loss and balance sheet items. The organized large scale enterprises seem to have accepted this practice.

The system of double entry compared to single entry is more complicated to apply and maintained but allows for more flexibility and standardization. It helps to minimise errors and identify problems like fraud within the organisation. It appears that most SMEs have not generally imbibed this form of record keeping culture as the standard practice. Most of the SMEs that develop the attitude of record keeping choose the single entry system which is easier to keep, however, very limiting for information, auditing and accuracy checking purposes.

Performance is considered to be the major goal of business enterprises whose tracking may be difficult if there is no sound book-keeping. Poor business performance has long remained unsolved especially for the most part of developing countries like Nigeria where SMEs take up the large part of the economy. It is also among the developing countries with the highest number of this type of businesses that perform poorly and close up before the end of the first five years in business largely attributable to ignorance of keeping books of accounts (IMF, 1999) and lack of sound financial culture (Sejjaaka, 1996 and Wabwire, 1996). Problem of monitoring economic growth is increased in an economy like Nigeria where financial records are not available concerning this growth sector of the economy. Furthermore, financial reporting is not commonly practiced in SMEs raising the question on the relevance and reliability of the financial information from this important sector of the economy.

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DETERMINANTS OF BOOK-KEEPING PRACTICES OF SELECTED SMALL AND MEDIUM ENTERPRISES

COMMUNITY BASED ORGANISATIONS (CBOs) AND DEVELOPMENT OF BASIC EDUCATION IN TARKA LOCAL GOVERNMENT AREA, BENUE STATE

CHAPTER ONE

INTRODUCTION

1.1          Background to the Study

Education is the bedrock of every existing community or nation; its relevance to development cannot be overemphasized.No nation can aspire to greatness without adopting education as an instrument for effecting national development. This is why there has been a lot of emphasis, particularly in recent times, on the importance of all citizens of the world having access to basic education. It is also in recognition of the importance of education that the International Communities and governments all over the world have stressed the need for citizens to have access to education.

Basic education has always been an important concern for society and the government. This is because universal literacy and the success of secondary and post-secondary education depend on the extensiveness and efficiency of basic education system of a country. As a result, basic education is viewed as a service that must be provided to the populace, irrespective of affordability. It is generally considered to be the responsibility of the state to deliver primary education(Nicholas,2012).

After attaining independence in 1960, Nigerian government made efforts to reshape the education system in line with the yearnings of the time. Nigeria‟s government after independence favored a public school system that would promote a national identity over ethnic and religious differences. Successive government used public education to promote national unity, and build human resources for the exploration of the country‟s natural resources. The Nigerian educational sector at all levels is plagued by a myriad of problems which has now become a going-concern
after years of un-arrested deterioration with the primary sub-sector been the worse hit.Sunal and Ose (1994)

The current policy on education in Nigeria has its root in the curriculum conference of 1969, which was sponsored by the Federal Government through the Nigerian Educational Research Council. Adepoju (2007) noted that one of the most important gains of this conference was the birth of the 6-3-3-4 system of education which was defined in the National Policy on Education (NPE) of 1977.In addition, Awoniyi (2007) observed that by 1997, a draft policy on education was discussed by the Federal Government and, in 1998; it was approved for implementation in 1999. What attracted the nation to the 6-3-3-4 system of education was the fact that it was rooted in science and technology which are tools for economic and technological growth anddevelopment as against the former system of 6-5-4 (Adepoju, 2007).

In April 2004, the Federal Government enacted the compulsory, Free Universal Basic Education Act. The Act was to put the programme into law to enable all states and Local Government Areas in the country to enforce the implementation of the programme.The UBE Acts empowers the Universal Basic Education Commission (UBEC) to disburse block grants from the consolidated federal funds to the States based on agreed formula. The funding provided by the FG is complimentary to funding to be provided by States and Local Governments. Specifically, the Universal Basic Education Act (2004) and the Child Rights Act provide the legal framework for the implementation of the UBE Programme, which makes basic education not only free but also compulsory. The UBE Act 2004 stipulates that the Federal Government‟s intervention shall only be assistance to the States and Local Governments in Nigeria for the purposes of uniform and Qualitative basic education throughout Nigeria (FRN 2004)

A self-help project undertaken through voluntary efforts and the active participation of individuals and corporate groups in communities constitutes an important nucleus in grassroots Educational development. This process involves organizing community members for identification of their needs, plan; and for action(s) to meet these needs with maximum reliance on their initiatives and resources, with or without the assistance of government or Non-Governmental Organizations (NGOs), Onyeozu(2010). The growth and development of a town is mainly a reflection of the population growth, location of industries, specialization and organization of the inhabitants of the community. In Nigeria most people believe that it is the responsibility of the government and its functionaries to provide for the needs of the communities. It was maintained that government could, and should develop communities, provide basic infrastructure, social and physical amenitiesDike (1979)

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COMMUNITY BASED ORGANISATIONS (CBOs) AND DEVELOPMENT OF BASIC EDUCATION IN TARKA LOCAL GOVERNMENT AREA, BENUE STATE

CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF LISTED MANUFACTURING FIRMS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1         Background to the Study

The nature and extent of relationship between capital structure and financial performance of firms have attracted attention in the literature of finance. Capital structure involves the decision about the combination of the various sources of funds a firm uses to finance its operations and capital investments. These sources include the use of long-term debt finance called debt financing, as well as preferred stock and common stock also called equity financing. One of the most important goals of financial managers is to maximize shareholders wealth through determination of the best combination of financial resources for a company and maximization of the company‟s value by determining where to invest their resources.

Capital structure represents the major claims to a corporation‟s asset. This includes the different types of equities and liabilities (Riahi-Belkaoui, 1999). The debt-equity mix can take any of the following forms: 100% equity: 0% debt, 0% equity: 100% debt; and X% equity: Y% debt. From these three alternatives, the first option is that of the unlevered firm, that is, the firm shuns the advantage of leverage (if any). Option two is that of a firm that has no equity capital. This option may not actually be realistic or possible in the real life economic situation, because no provider of funds will invest money in a firm without equity capital. This partially explains the term “trading on equity”, that is, the equity element that is present in the firm‟s capital structure that encourages the debt providers to give their scarce resources to the business. The third Option is the most realistic one in that, it combined both a certain percentage of debt and equity in the capital structure and thus, the advantages of leverage (if any) is exploited. This mix of debt and equity has long been a subject of debate in finance literature concerning its determination, evaluation and accounting.

Financial performance is the measure of how well a firm can use its assets from its primary business to generate revenues. Erasmus (2008) noted that financial performance measures like profitability and liquidity among others provide a valuable tool to stake holders which aids in evaluating the past financial performance and current position of a firm. Financial performance evaluation are designed to provide answers to a broad range of important questions, some of which include whether the company has enough cash to meet all its obligations, is it generating sufficient volume of sales to justify recent investment. Capital structure is closely linked with financial performance (Tian and Zeitun, 2007). Financial performance can be measured by variables which involve productivity, profitability, growth or, even, customers‟ satisfaction. These measures are related among each other. Financial measurement is one of the tools which indicate the financial strengths, weaknesses, opportunities and threats. Those measurements are return on investment (ROI), residual income (RI), earning per share (EPS), dividend yield, return on assets (ROA),, growth in sales, return on equity (ROE),e.t.c (Stanford, 2009).

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CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF LISTED MANUFACTURING FIRMS IN NIGERIA

BOARD SUPERVISION AND EARNINGS QUALITY OF LISTED CONGLOMERATE FIRMS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

Earnings quality and the quality of financial reporting in general are subjects that have attracted much attention and are the centre of debate for investors, regulators as well as scholars in the recent years. This heightened attention to the subject of earnings quality is, in part, due to the wave of accounting scandals of the early 2000s (the manipulation of accounting figures) (Hermanns, 2006). However, earnings quality has been a topic of increasing importance and interest especially after the colossal corporate collapses of Enron, WorldCom, Parmalat and, more specifically, Leisurenet and Fidentia in South Africa amongst others, which has put a big question mark on the financial reporting quality of the publicly listed companies in stock market (Abdullah, 2004).

Earnings quality is of interest to users of financial statements because earnings and the varied metrics derived there from are utilized in making contracting and investment decisions. From a contracting perspective, low-quality earnings may result in unintended wealth transfers. From an investor‟s vantage point, low-quality earnings are undesirable because they result in a defective resource allocation signal (Schipper & Vincent, 2003). This is also supported by Myers, Myers & Omer (2003), who stated that poor quality of earnings is problematic because it can mislead investors, resulting in misallocation of resources. In the recent work of Redhwan, (2014) erosions in earnings quality, transparency, and disclosure levels have caused investors to be less confident in the integrity of accounting numbers. Since investors need unbiased earnings information to make the right investment decisions, financial crises and financial reporting scandals have unveiled the importance of board supervision and highlighted the crucial need for firms to enhance the quality of reported earnings. Earnings quality is an important characteristic of financial reports that affects the efficient allocation of resources (Peter, Baruch, Melissa, & Sarah , 2013).

The generation of quality earnings information depends on a whole set of guarantee mechanisms, for instance, a governance mechanism capable of efficiently supervising the process of accounting information reporting. The board of directors, as the core of corporate governance, will undoubtedly play a key role in supervising listed companies‟ financial reporting process and the quality of financial reporting. Strengthening the board of directors, such as enhancing the board‟s independence, improving its capabilities of detecting problems in financial statements, and clarifying explicitly directors‟ responsibilities, is regarded as an efficient way to ameliorate the board supervisory and monitoring practices and the quality of financial reporting (Qinghua, Pingxin & Junming, 2007).

Accounting scandals broke out one after another in various enterprises, under the guise of related party transactions, and accounting fraud was perpetrated through benefit transactions between the parent and subsidiary companies, such as Enron and WorldCom in the United States. The occurrence of these major cases exposed the lack of supervising mechanisms in enterprise management and resulted in heavy investor losses. In order to reduce the behavior of surplus manipulation of enterprises and to restore investor confidence and stable operations in the capital markets, the Organization for Economic Cooperation and Development (OECD), the World Bank, and other international organizations advocated supervising mechanisms to strengthen corporate governance effectively. Therefore, the related issue of supervising mechanisms that could enhance the effectiveness of corporate governance gained momentum and received considerable attention in countries around the world, and became an important topic of academic research (Hsiang-tsai, .Li-jen, & Chih-Hung, 2012).

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BOARD SUPERVISION AND EARNINGS QUALITY OF LISTED CONGLOMERATE FIRMS IN NIGERIA

BANK SPECIFIC DETERMINANTS OF CAPITAL ADEQUACY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1         Background to the Study

Banks occupy an important position in the financial sector and their activities are subject to regulation and supervision for the purpose of preserving financial stability. The banking sector of an economy stimulates the economic competence by mobilizing savings to investment channels. It serves as a bridge between savers and borrowers and to execute all tasks concerned with the profitable and secure channelling of funds. Beyond the intermediation function, the financial performance of banks has significant implications for economic growth of an economy as sound financial performance rewards the investors and other stakeholders for their investment and encourages additional investment. On the other hand, poor banking performance may lead to banks‘ failure and collapse which could negatively impact on the economic growth of the economy. Banks serve as means of transmitting monetary policy of the federal government at the macroeconomic level. At micro economic level, banks are major source of financing for businesses and individuals. Banks therefore facilitate spending and investment that fuel growth in the economy.

The soundness of banking systems plays a vital role not only for local depositors but for foreign creditors and investors as well. If there is an increase in bad loans and investments, the liabilities of the domestic banks will exceed the real value of their assets and depositors will likely engage in bank run which will precipitate a banking crisis. Although the risk can be avoided through a government‘s deposit insurance, complete reliance on the deposit insurance can encourage banks to engage in riskier lending

(Feldstein, 2003). A systemic collapse can also hinder the ability of the deposit insurance fund to cover all of the deposits. It is not possible to eradicate bank failure completely, but governments want to make the possibility of default for any given bank very small. Through this, it is hoped to boost the confidence of private individuals and businesses in the banking systems by creating a stable economic environment. A major difference exists between bank and non-bank firms in terms of bankruptcy. The bankruptcy of large non-banking firms has relatively lesser impact on the economy as a whole compared with the collapse of a bank. The bankruptcy of a bank results in a systemic crisis that adversely affects the economy at large. This is mainly because bank failures adversely affect investors‘ confidence in the financial system and this will decrease credit supply which in turn results in economic recession. Furthermore, the banking business depends to a large extent on public confidence which helps banks to attract deposit and invest same in profitable investment opportunities.

Banks are expected to have adequate amount of capital in order to support its business expansion; to serve as a buffer to prevent any unexpected loss that banks might face and also to absorb losses arising from a various risks that they face. Banks are also required to have a buffer according to the provisions of the minimum capital requirement set by the regulatory authorities.

Bank regulators everywhere in the world are concerned with the safety of depositors‘ funds. It is for this reason the capital adequacy becomes relevant and important. Capital adequacy refers to the amount of equity capital and other securities which a bank holds as reserves against risky assets as a hedge against the probability of bank failure (Greuning & Sonja, 2003). It also refers to the extent to which the assets of a bank exceed its liabilities, and is thus a measure of the ability of the bank to withstand a financial loss. Capital adequacy in banking business gives protection against sudden financial losses. According to the Capital Adequacy Standard set by Bank for International Settlements (BIS), banks must have a primary capital base equal at least to eight percent of their assets.

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BANK SPECIFIC DETERMINANTS OF CAPITAL ADEQUACY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

ASSESSMENT OF THE IMPACT OF YOUTH COMMERCIAL AGRICULTURAL DEVELOPMENT PROGRAMME ON UNEMPLOYMENT REDUCTION IN EKITI STATE (2011-2015).

CHAPTER ONE

INTRODUCTION

1.1            Background to the study

The global community has been relentless in its effort at furthering the course of humanity in all dimensions, especially in the aspect of efficient resource management to ensure progress in the improvement of conditions of living since the whole essence of natural endowment and technical advancement of any kind is towards human satisfaction or values. Paradoxically, human beings, being the end beneficiaries of the values that accrue from efficient human resource management are also part and parcel of the resources to be managed since they constitute initiators and participants in the feat of development or progress that engenders the necessary values. However, there is no part of the global community that has been able to engage its entire people that are willing to work (participate in the process of development).

This is to say that unemployment is sparsely present in all countries of the world. Despite falling unemployment levels in developed economies like Europe (7.1 percent in 2014 to 6.7 percent in 2015), global job crisis is not likely to end, especially in emerging economies in view of the continuous high rates of unemployment World Wide as well as chronic vulnerability of employment in many developing economies (ILO,2016). The final figure for global unemployment in 2015 was estimated to stand at 197.1 million to reach 199.4 million as well as 1.1 million likely to be added in 2017 (ILO, 2016). The significant slowdown in emerging economies coupled with a sharp decline in commodity prices is having a dramatic effect on the world of employment (Ryder, 2016); many working women and men are having to accept low paid jobs both in emerging and developing economies and also, increasingly in developed countries, and despite a drop in the number of unemployed people in EU countries and the U.S.A, too many people are still jobless (Ryder, 2016).

The foregoing is not unconnected to the fact that agricultural potentials have not been fully exploited across the globe; the sector account for a comparatively small share of the global economy, but remains central to the lives of a great number of people. In 2002, of the world’s 7.1 billion people, an estimated 1.3 billion (19 percent) were directly engaged in farming, but agriculture (including the relatively small hunting fishing and forestry sectors) represented just 2.8 percent of overall income (World Bank, 2012) as cited in Alston et al (2014). It is therefore indicative that there is huge potential to be exploited in agricultural sector which most countries have realized and are taking the path through agricultural development.

Nigeria, despite its enviable riches, both in human and material resources is woefully caught in the web of unemployment crisis. It is worrisome that Nigeria which occupies an area of 923,768sq.km out of which 82 million hectares are arable lands, has 140,431,790 people as at 2006 as revealed by the 2006 population census and an estimated current population of 187 million as revealed by United Nations (www.worldmeters.info/world-population) is still being ravaged by poverty largely because of increasing rate of unemployment. According to National Bureau of Statistics (2012), 69 percent of Nigeria’s estimated population live in poverty. It described it as one of the effects of high rate of unemployment in the country which was put at 12.1 percent in the first quarter of 2016 (www.Tradingeconomies.com/nigeria/un) and 13.9 percent in December –fourth quarter of 2016 (National bureau of statistics, 2016).

By the time Nigeria became independent in October 1960, agriculture was the dominant sector of the economy, contributing about 70 percent of gross domestic product (GDP), employing about the same percentage of the working population, and accounting for about 90 percent of foreignearnings and Federal Government Revenue (CBN, 2010). The sector was self-sufficient in food production (Anyanwu, et al 1997, Tomori, 1979, CBN 1997). The influence of agriculture also manifested in the fact that during the early period of post-independence up to mid-1970s, there was rapid growth of industrial capacity and output, as the contribution of the manufacturing sector (which largely depended on agricultural output) to the GDP rose from 4.8% to 8.2 (CBN, 2010).This pattern changed when oil suddenly became of strategic importance to the world economy and invariably Nigerian economy through its supply-price nexus.

Then began the dramatic shift of policies from a holistic approach to benchmarking. Nigeria became an importer of some of the agricultural products it was exporting especially food grains; the import bill rose from 45 million dollar in 1966 to 1,964.8 million dollar in 1981. The agricultural sector’s contribution to GDP declined and reached an all-time low of 21.8 percent between 1976 and 1980; growth rate was negative figure between 1971 and 1975. In addition, earnings from the sector declined in relative terms to about 1.6 percent; the ratio of agricultural exports to imports dropped between 1960 and 1969 to as low as 0.09 percent in 1981 (Olayemi, 1986)

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ASSESSMENT OF THE IMPACT OF YOUTH COMMERCIAL AGRICULTURAL DEVELOPMENT PROGRAMME ON UNEMPLOYMENT REDUCTION IN EKITI STATE (2011-2015).

BANK SPECIFIC ATTRIBUTES AND OFF BALANCE SHEET ACTIVITIES OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1         Background of the Study

In the recent decades, banking deregulation, technological changes, financial deepening and innovation have lead to a more market oriented structure where firms greater than ever relying on financial market to fund their investments. This change cut across most financial markets especially in Canada, US, Europe, Asia and in different places around the world (Calmes & theoret, 2010; Calmes, 2004; Roldos, 2006). The resulting outcome is major change in corporate financing characterized by relative cut in the share of bank loan and increased share of bonds and stocks. The transformation is challenging banking business and justified, in part, with the financial deregulation where banks are increasingly allowed to act as security dealer and to offer fiduciary services and portfolio advice to investors. In addition to traditional practices, banks also begin to securitize loans, trade in financial instruments such as guarantees, commercial papers, acceptances, letters of credit, performance bonds, indemnities that are more in line with financial deepening process. These non tradition activities are loosely seen as off balance sheet activities. Off balance sheet activities therefore are transactions that are not currently recognized as assets or liability on the balance sheet but nonetheless give rise to credit risk, contingencies and commitments are reported off balance sheet. Off balance sheet activities have become an issue of global significance gathering controversy.

Off balance sheet activities expose banks to much danger such as earnings management, creative accounting, and insolvency to mention but a few through the use of Special Purpose Vehicles (SPVs). Some banks engaged in manipulating their books, colluding with other banks to artificially enhance their financial positions and consequently stock prices. Practices such as converting non-performing loans into commercial papers and bank acceptances and setting up Special Purpose Vehicles to hide losses were very common (Akintoye & Owojori, 2011). Moreover, Sanusi (2010) pointed out a series of scandal associated with SPVs such that the CEO of Oceanic Bank controlled over 35% of the bank through SPVs borrowing customers‟ deposit. A CEO set up SPVs to lend money to themselves for stock price manipulation and purchase of estates all over the world.

Some bank management also set up one hundred fake companies for the purpose of perpetrating fraud. Sanusi (2010) also revealed that much of the capital apparently raised by the so called mega bank was fake capital financed from depositors‟ funds and 30% of the share capital of intercontinental bank was purchased with customers‟ deposits among others. Thus, it was discovered that in many cases, consolidation was a sham and the banks never raised the capital they claimed they did (Sanusi, 2010). Deposit Money Banks are linked with specific attributes which impact on their off balance sheet activities either positively or negatively. One of such is credit risk. Banks engage in off balance sheet activities as a risk management instrument against the increasing credit risk (Khasawneh, 2007). Banks used off balance sheet items to generate more income and compensate for the loan losses. Credit risk relates to the risk associated with the quality of a bank earning assets, namely its loan (Tamrat, 2013).

Asset quality is also the second component of a bank‟s CAMEL rating. Moreover, decline in asset quality lead to write off and reduced earnings from the loan portfolio (Chaudhry, 1994). Kargi (2011) pointed that credit risks are found in all activities in which the success depends on counterparties, issuer or borrower performance. Credit risk has traditionally been considered to be the most important risk for a commercial banks and poor quality asset has probably been the cause of more bank failures than any exposures to be discussed. Bennett (1986) claimed that credit risks are found in OBS activities since it provides an opportunity to increase leverage significantly without additional regulatory requirements.

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BANK SPECIFIC ATTRIBUTES AND OFF BALANCE SHEET ACTIVITIES OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA