ACCOUNTING CONSERVATISM AND FINANCIAL PERFORMANCE OF NIGERIAN DEPOSIT MONEY BANKS: AN ANALYSIS OF RECENT ECONOMIC RECESSION

Abstract

This study explores the relationship between Accounting conservatism and Bank performance in Nigeria. The study uses ex-post facto research design in a sample of 10 Nigerian deposit money banks (NDMBs). Secondary data for a period of 5 years (2012-2016) was used. The study model examined the relationship between the independent variables (Accounting conservatism) and the dependent variable (Bank performance), by applying the Advance panel Multiple regression  analysis (Panel Corrected Standard Error).The results obtained from this research indicate that there is a significant relationship between accounting conservatism and Bank performance in Nigeria. From the result conditional accounting conservatism (C-ACC) has a positive relationship with Bank performance (ROA) while unconditional accounting conservatism (UC-ACC) is negatively related to Bank performance (ROA). The study concluded that there is a significant relationship between accounting conservatism and bank performance  in Nigeria. The study suggest that Managers of NDMBs should use conditional conservatism as a means to manage information asymmetry in their financial reporting strategies. Also it is recommended that accounting standard setters and bank regulators should consider the effects of unconditional accounting conservatism on banks performance when designing rules and regulations for banks.