Accounting and Auditing

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Browsing Accounting and Auditing by Subject "Abnormal loan loss provision."

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    Determinants of Financial Reporting Quality: Evidence from Ethiopian Private Banks
    (Addis Ababa University, 2017-06) Eden, Sisay; Laxmikantham P. (PhD)
    This study intends to assess the impact of firm specific (profitability, liquidity, leverage, nonperforming loan, bank age and auditor change) determinants of financial reporting quality in Ethiopian private banks. Accordingly, the study used document review of banks’ audited financial statements. Using purposive sampling method, the study selected a sample of six private banks from a total population of sixteen private banks to conduct a study for the period of fifteen years (2002-2016) with the total of 90 observations. To test the hypotheses, the study adopted the quantitative research approach. The secondary data were analyzed using descriptive statistics, correlation matrix and multiple linear regression analysis and data from document reviews were interpreted qualitatively. The results of panel least square regression analysis show that profitability and non-performing loan have statistically significant and negative effect on Ethiopian private banks’ financial reporting quality. On the other hand, liquidity and bank age have statistically significant and positive effect on Ethiopian private banks financial reporting quality. However, leverage and auditor change have statistically insignificant effect on financial reporting quality of Ethiopian private banks. In addition, the results of the analysis indicate that signaling theory is pertinent theory in Ethiopian banking industry, whereas there is little evidence to support the agency theory. Therefore, banks should give consideration to profitability, liquidity, non-performing loan and bank age in order to have better financial reports.