Determinants of Financial Reporting Quality: Evidence from Ethiopian Private Banks
No Thumbnail Available
Date
2017-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
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.
Description
A Thesis Submitted to the
Department of Accounting and Finance
College of Business and Economics
Presented in Partial Fulfillment of the Requirements for the Degree
of Master of Science in Accounting and Finance
Keywords
Abnormal loan loss provision., Earning management, Financial reporting quality