ENHANCING FINANCIAL SECURITY IN NIGERIA'S BANKING SECTOR: AN INVESTIGATION OF AUDITOR REGULATIONS, CORPORATE GOVERNANCE, AND EARNINGS MANAGEMENT IN LISTED DEPOSIT MONEY BANKS

Abstract

The Nigerian banking sector has experienced significant financial crises, including fraud and excessive earnings management, which have eroded stakeholders' trust in financial statements and raised concerns about the effectiveness of auditor regulations and corporate governance. This study investigates the impact of auditor regulations and corporate governance on earnings management in listed deposit money banks in Nigeria, with a view to identifying strategies for enhancing financial security in the banking sector. The study employed a mixed-methods approach, combining both qualitative and quantitative data from the annual reports of twelve listed deposit money banks in Nigeria, covering the period from 2013 to 2022. The results show a significant positive relationship between auditor regulations and earnings management, and ANOVA results indicate a cross-sectional difference in earnings management across the selected banks, with macro-economic factors, such as inflation and GDP growth, being major obstacles to effective monitoring. The study concludes that auditor regulations and corporate governance have a significant impact on earnings management and recommends that regulatory authorities strengthen their oversight role, banks adhere to established regulations and standards, and macro-economic factors be considered when monitoring earnings management practices.