RECAPITALISATION AND EARNINGS QUALITY OF NIGERIAN DEPOSIT MONEY BANKS

The issue of earnings quality of Nigerian Deposit Money banks has been brought to the front burner in the wake of the special audit of the banks by the Apex regulatory body, Central Bank of Nigeria (CBN) and consequent bailout of many banks barely five years after the policy driven consolidation exercise. This study examines the impact of the banking consolidation on the earnings quality of Nigerian Deposit Money Banks. The population of the study consists of twenty one banks that survived the consolidation and quoted on the Nigerian stock exchange. The sample size of the study is eight banks drawn from the population of the study based on the sampling filters adopted. Independent ttest is adopted as statistical tool in testing the hypotheses of the study. The study establishes that the consolidation exercise has no significant impact on two of the three hypotheses tested i.e earnings variability and earning surprise. But it revealed significant impact on the third hypothesis, ratio of cash flow from operations to net income of Nigerian deposit money banks. The study therefore, concludes that the earnings quality of Nigerian deposit money banks after the consolidation exercise is questionable in view of the inconsistencies of the results. The study recommends among others that Nigerian banks should adopt international financial reporting standards in order to check earning management, engagement of only specialized auditors and the