Impact of Profitability on Earnings Quality of quoted Deposit Money Banks (DMBs) in Nigeria

Abstract

The study examined the Impact of Profitability on Earnings Quality of Deposit Money Banks in Nigeria. The data used for this study were sourced from CBN statistical bulletin, and development indicators. The population consists of 14 deposit money banks quoted on the Nigerian stock exchange from the period of 2006 to 2019. The paper used purposeful sample to arrive at 12 deposit money banks used for the study. Loan loss provision (LLP) was used a proxy for earnings quality while return on asset (ROA) was used as a proxy for profitability by means of Ex-post factor research design, pre-estimation tests were carried out on each of the variables using Augmented Dickey Fuller (ADF) unit root test to avoid spurious regression results, Hausman test fixed and random effect was estimated to choose which model fits. The study employed random linear ordinary least square pooled OLS for which was analyzed via E-views 10. The findings from the study revealed there is a significant relationship between return on asset and loan loss provision of deposit money banks (DMBs) in Nigeria. It conclude that profitability boost earnings quality of deposit money banks (DMBs) because when banks makes more profit it increase the volume of earnings in general. It therefore recommended that proper and adequate measures should be put in place for the evaluation, examination and oversee of statement of DMBs.