IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-05206123.html
   My bibliography  Save this paper

Related Party Transaction and Income Smoothing in Nigerian Listed Commercial Banks: The Moderating Effect of Capital Adequacy

Author

Listed:
  • Prince Ozuruonye George

    (Department of Accounting, Ignatius Ajuru University of Education, Port Harcourt, Nigeria.)

  • Gospel J. Chukwu

    (Department of Accountancy, Ken Saro Wiwa Polytechnic, Bori, Rivers State, Nigeria.)

Abstract

There has been increasing concern over the effect of related party transactions on the credibility of reported earnings. This is moreso in sectors that are associated with opaque practices such as the banking industry where insider loans sometimes degrade the quality of loan assets. This study investigated the association between related party transaction (measured by deposits from related parties) and income smoothing, and evaluated the moderating influence of capital adequacy on the relationship. The study was premised on signalling theory and institutional theory, and data from eleven listed commercial banks in Nigeria for nine years were analysed using Pearson correlation and multivariate regression model. Results showed that deposits from related party were positively and significantly associated with income smoothing, suggesting that as deposits from related party increase, the level of income smoothing also increases. Further results showed that capital adequacy significantly moderated this relationship by changing the direction of the relationship from positive to negative. The findings of this study add to the scanty literature on related party transactions (RPT) and income smoothing in Nigeria, and provide first-time evidence on the effect of regulatory capital on the relationship between related party transaction and income smoothing. The results also have implication for regulators, especially those in search of solutions to the problem of poor quality earnings.

Suggested Citation

  • Prince Ozuruonye George & Gospel J. Chukwu, 2022. "Related Party Transaction and Income Smoothing in Nigerian Listed Commercial Banks: The Moderating Effect of Capital Adequacy," Post-Print hal-05206123, HAL.
    • Handle: RePEc:hal:journl:hal-05206123
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-05206123. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.