Executive compensation, share ownership, and earnings management of banks in Nigeria

International Journal of Economics and Management Pub Date : 2023-01-01 DOI:10.22367/jem.2023.45.02

Musa Adeiza Farouk, Zik-Rullahi Abubakar Ahmed

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引用次数: 1

Abstract

Abstract Aim/purpose – Higher compensation and increased share ownership are believed to drive fewer earnings management. Therefore, the study examines the moderating impact of share ownership on the relationship between executive compensation and earnings management of listed Deposit Money Banks in Nigeria. Design/methodology/approach – Panel Least Square regression and Stata 13 were used for the estimation. The secondary data source was employed and extracted from the banks’ published financial statements covering the period from 2007-2018. Post-estimation tests, including normality tests of standard error, heteroscedasticity, and multicollinearity, were carried out to validate the outcome. Executive compensation variable is represented by Chief Executive Officer Pay (CEO Pay), Board Chairman’s compensation, and the highest-paid director, while executive share ownership represents the moderator variable. Chang et al. (2008) model was used to proxy earnings management. Findings – The findings revealed that CEO Pay increases the banks’ level of earnings management, while after moderation with executive share ownership; CEO pay decreases the possibilities of earnings management by banks. Compensation to Chairmen of the banks decreases the level of earnings management of banks. However, an increase in share ownership of the board with an increase in compensation to chairmen of banks’ boards increases the earnings management practices of the management of the banks. Research implications/limitations – The findings imply that the executive ownership interest should be made to align with that of the minority shareholders following an increase in their stake so that they can act in the overall best interest of the owners. The study is limited to only the banking sector and some specific executive compensation variables. Originality/value/contribution – The utilization of the highest paid director variable and use of share ownership as a moderator between executive compensations and earnings management.

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尼日利亚银行高管薪酬、股权和盈余管理

摘要目的/目的-更高的薪酬和增加的股权被认为会减少盈余管理。因此，本研究考察了股权对尼日利亚上市存款货币银行高管薪酬与盈余管理关系的调节作用。设计/方法/方法-使用面板最小二乘回归和Stata 13进行估计。二级数据来源是从银行公布的2007-2018年期间的财务报表中提取的。后估计检验包括标准误差正态性检验、异方差检验和多重共线性检验，以验证结果。高管薪酬变量由首席执行官薪酬(CEO Pay)、董事会主席薪酬和薪酬最高的董事代表，高管持股率代表调节变量。采用Chang et al.(2008)模型来代理盈余管理。研究结果——研究结果显示，CEO薪酬提高了银行的盈余管理水平，但与高管持股比例呈正相关;CEO薪酬降低了银行进行盈余管理的可能性。银行董事长薪酬降低了银行盈余管理水平。然而，随着董事会主席薪酬的增加，董事会股权的增加增加了银行管理层的盈余管理实践。研究启示/限制-研究结果表明，在增加股权后，高管的所有权利益应与少数股东的利益保持一致，以便他们能够为所有者的整体最佳利益行事。这项研究仅限于银行业和一些具体的高管薪酬变量。原创性/价值/贡献——利用薪酬最高的董事变量和使用股权作为高管薪酬与盈余管理之间的调节因子。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

International Journal of Economics and Management Economics, Econometrics and Finance-Economics, Econometrics and Finance (all)

CiteScore

1.80

自引率

0.00%

发文量

期刊介绍： The journal focuses on economics and management issues. The main subjects for economics cover national macroeconomic issues, international economic issues, interactions of national and regional economies, microeconomics and macroeconomics policies. The journal also considers thought-leading substantive research in the finance discipline. The main subjects for management include management decisions, Small Medium Enterprises (SME) practices, corporate social policies, digital marketing strategies and strategic management. The journal emphasises empirical studies with practical applications; examinations of theoretical and methodological developments. The journal is committed to publishing the high quality articles from economics and management perspectives. It is a triannual journal published in April, August and December and all articles submitted are in English. IJEM follows a double-blind peer-review process, whereby authors do not know reviewers and vice versa. Peer review is fundamental to the scientific publication process and the dissemination of sound science.