Abstract
The study evaluated the effect of executive compensation on financial reporting quality in Nigerian financial service industry for the period covered. These were with a view to providing information on the effect of executive compensation and financial reporting quality in Nigeria. The study employed a secondary source of data collection. The population for the study consisted of 22 quoted deposit money banks listed and whose stocks are actively traded on the Nigerian Stock Exchange (NSE) market for the period 2006-2017.The sample size of 14 was determined using purposive sampling method. Secondary data were collected on variables executive compensation, non-performing loan, loan loss provision, total loan, residual term all obtained from the audited Annual reports of the selected deposit money banks, fact book published by Nigerian Stock Exchange, and the Central Bank of Nigeria. Data collected were analyzed using Robust Regression. The results showed executive compensation (coef. =-0.139, p˂0.004) has a negative significant relationship with financial reporting quality. This study concluded that executive compensation has a negative significant effect on financial reporting quality.
Highlights
Financial reporting is one of the most significant aspects of an accounting system which aims to provide users with the necessary information to make economic decisions on the evaluation of the viability and quality of an economic enterprise (Mohammadi, 2014)
Multicollinearity Test was conducted using variance inflation factor (VIF).The results showed no incidence of multicollinearity
SUMMARY AND CONCLUSION Assessment of the effect of executive compensation on financial reporting quality was conducted by pre-estimation test of descriptive statistics, correlation and regression analysis
Summary
Financial reporting is one of the most significant aspects of an accounting system which aims to provide users with the necessary information to make economic decisions on the evaluation of the viability and quality of an economic enterprise (Mohammadi, 2014). Financial reporting fraud and other forms of wrongdoing in financial reporting are a significant threat to capital markets ' life and performance. This misconduct undermines the trust among firms, investors and market participants required to engage in trade. It contradicts the key role of resource allocation on the capital markets. This is because the low quality of financial reporting could include manipulating financial statements (Amiram et al, 2018)
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