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1-5 chapters |


Bank Name: FCMB Bank

Account Type: Savings
Account number: 7749601025

Bank Name: Access Bank

Account Type: Current
Account number: 0107807602






By the evolution of today’s modern business, many of the corporation  have become owed and controlled by families and the major agency problem exist not only between the management and minority shareholders as well. Due to the increase in this conflict, the issue of trust has taken the key position in today’s financial analysis procedure. Because management is accountable to shareholders within the business. Other stakeholders are also present and each stakeholder has his own interest in the business so each one has authority and also tries to command the result of that authority to his own favour.  Earning sometimes called the “bottom line” or “not income” are the single most important item in financial statement. They indicate the extent to which a company has engaged in value – added activities they are a signal that helps direct resource allocation in capital markets. Given the importance of earnings, it is no surprise that company management has a vital interest in how they are reported. That is why every executive needs to understand the effect of their accounting choices so they can make the best possible decision for the company. They must in other words learn to manage earnings.

This study also attempt to assess that whether corporate governance creates any impact on earnings management of not good governance means that little expropriation of corporate resources by management or contouring shareholders which contribute to better allocate resources for better performance as investors and lenders will be willing to put their money in firms with good governance. Other stakeholders, including employees and suppliers will also want to be more prosperous, fairer, longer lasting than those winless effective governance.

Over the past two decades a number of prominent participants in the debates were surrounding professional accounting and auditing standard increase the attention given to the role of corporate procedure in financial reporting practices.

Corporate governance is not just about the process by which elicited representatives as directors make decisions it is also about the way organizations are held accountable. The obvious way is via financial reporting.

A lot of financial reporting issues have remained under discussion in the financial literature, earnings management is one of them.

Impact of corporate governance on earnings management is the core theme of this paper. Implicit in all of their recommendation is the ascertion that the creditability of financial statement information is related to specific institutional features of corporate governance. The purpose of this will be to identify the empirical evidence that such a relation exist. The purpose is also to find out between different measures of earning management and the composition of firms board of directors particularly the subset of directors serving in the edit committee.

In developing countries like Nigeria, more attention needs to be paid to the corporations owned controlled by families and with the family members holding the managerial position. However, the major agency problem exist not between the management and owners in general but between the managerial and minority shareholders.

The existence of large shareholders may be itself not be a matter of concern or may even be a blessing but the beneficial effect of large shareholders should be expected only when management is separated from ownership or when proper corporate governance mechanism are in place so that outsides shareholders can effectively check misbehavior by controlling owner’s


The research as easier noted noted is “Earning management and corporate governance in Nigeria banking industry”.

The research problem is a study attempts to assess whether corporate governance creates any impart on earning management thus the research tends to provide answers to the following questions.

  1. To what extent has earning management and corporate governance improve management decision making in the banking industry
  2. Has corporate governance creates any impart on earning management.


Any study without a clearly defined objective is baseless and worthless. At one end of the continuum is the issue of “earnings management” and at the other end is the resultant use of corporate governance in the banking industry. Hence the objectives of study would be emphasize as follow:

  1. To investigate hoe earnings management and corporate governance improves management decision making in the banking industry
  2. To determine the relative impart of corporate govanance on earnings management.


In undertaking this study the following alternatives hypothesis were formulated.

  1. There is a positive relationship between earnings management, corporative governance and decision makings.
  2. Corporate governance impart positively on earnings management.


The scope of the study will provide boundary for research of the study in terms of the following

SAMPLE SIZE: selected ten commercial banks in Nigeria.

GEOGRAPHICAL COVERAGE: The research will be carried out within the southern part of Nigeria.

TIME HORIZON: The length of period covered by the study will be four (4) years 2007 – 2010


A good earnings management and corporate governance is the pivot of a successful administrative management in the banking industry. The importance of the study is as follows.

  1. The banking industry in Nigeria will find the research finding or report useful in decision making.
  2. Investors and other interested parties such as shareholder and business oriented individuals will find the research finding useful for investment decision.
  3. Society which is made up of individual and organization will find the research findings useful for investment deisms
  4. Government: Authorities and agencies will find the research finding useful in the areas of making tax policy and investment decisions into corporate organizations.
  5. Analysis and future researchers such as professional accountants, auditors and academicians will find the research findings useful for analyzing the role of corporate governance on earnings management through financial reporting and the future research by academicians.
  6. Date Bank Future Studies: The research findings or literature will serve as research topic for future studies by academicians and researchers.


  1. The study is limited by respondents to the questionnaire design who might not like to disclose certain requisite information concerning the organization to an outsider
  2. The accuracy and reliability of the research findings are limited by the extent of the reliability of the information gathered through personal interview. And it may also be limited by financial constraint.


There are several terms to be defined in the chapter but majority will be talked about in chapter two (literature review) such terms are earnings, earnings management, corporate governance, investment, management, control, data, bank etc should be looked into.

  1. EARNINGS: according to investor’s word, earnings can be defined as revenues minus cost of sales, operating expenses and taxes over a given period of time. Earnings are the important determinant of a stock price.
  2. EARNINGS MANAGEMENT: Earnings management may be define as a reasonable and legal management decision making and reporting intended to achieve stable and predictable financial result it can also be defined as manipulation of company’s financial earning either directly of through indirect accounting methods.
  3. CORPORATE GOVERNANCE: Corporate governance is a term that refers broadly to the processes or laws by which business are operated and controlled. The term can be refers to internal factors defined by the officers stockholders or constitutions of corporation as well as external forces such as consumers groups event and government regulations.
  4. INVESTMENT: It is the purchases of financial product or other item of value with an expectation of favourable future returns.
  5. MANAGEMENT: Management can be define as collective body of those who manage or direct any enterprise or interest i.e. the board of managers. Management team works to gather to choose a solution that will benefit the company the following are what management do.

–        make decision

–        set company vision

–        create corporate culture

–        Enforce policy and procedure.

  1. CONTROL: It involves a comparison of actual result or performance with budgeted so that deviation from plan can identified as corrected actions taken.
  2. DATA: It represent facts at any kind it is the raw material from which information is produced.
  3. BANK: this can be seen as an organization, usually a corporate, chartered by a stake or federal government which does most of all the following such as receive demand deposits and time deposit honors instruments drawn in them and pay interest on them; discount notes, makes loans and invest insecurities, collects clocks, draft and notes, certifies depositors, checks and issues draft and cashiers checks.