Earning management and financial distress among commercial banks in ghana
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Date
2023
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KNUST
Abstract
The focus of this study was evaluating how earning management influences the financial distress of listed commercial banks in Ghana. Using a purposive sampling approach, 10 commercial banks in Ghana were selected and their financial statements and annual reports within the period of 2011 and 2020 were obtained from their respective websites. With the aid of the SPSS version 24 software, both descriptive and inferential statistics including panel regression using the stepwise ordinary least square regression were done on the data obtained. It was realized that firm size and profitability (ROA) were significant (p<0.05) determinants of earning management. Firm size, asset tangibility and profitability (ROA) were significant (p<0.05) determinants of financial distress. Earning management has a significant (p<0.05) effect on the financial distress of the listed commercial banks. The positive correlation indicates that an upsurge in the firm earning management will necessitate an increase the financial distress of the commercial banks and the other way round. The findings of this study demonstrate how earnings management affects value relevance. Additionally, the management of earnings via long-term discretionary accruals has a greater impact on the value-relevance of earnings and book value than management of earnings via short-term discretionary accruals. Therefore, the management of the listed commercial banks should put up more rigorous and internally standard schemes and strategies to manage their earnings effectively so as not to avert distress of finances among the commercial banks.
Description
A thesis submitted to the Institute of Distance Learning, Kwame Nkrumah University of Science and Technology, in partial fulfilment of requirement for the degree of msc accounting and finance