IMPACT OF CORPORATE GOVERNANCE MECHANISMS ON FINANCIAL REPORT INTEGRITY OF DEPOSIT MONEY BANKS IN NIGERIA

This study investigated the influence of corporate governance mechanisms on financial reporting integrity (FRI) among deposit money banks in Nigeria. Financial reporting integrity, a critical foundation for investor confidence and market efficiency, is often undermined by earnings management practices facilitated through discretionary accruals. Drawing on agency and stakeholder theories, the study evaluates four key governance variables—board independence, audit committee effectiveness and board size and their relationship with the quality and credibility of financial disclosures. Employing an explanatory research design, secondary data were sourced from the audited annual reports of ten purposively selected deposit money banks listed on the Nigerian Exchange Group (NGX) between 2019 and 2023. Descriptive statistics and multiple regression analysis were used to test the study’s hypotheses and establish cause-and-effect relationships. Preliminary evidence from extant literature highlights that weak governance structures, ineffective oversight, and concentrated executive power contribute to discretionary reporting practices and diminished transparency. The findings of this study reveal that board independence and audit committee effectiveness significantly improve financial reporting integrity by reducing discretionary accruals, while larger board sizes weaken reporting integrity by encouraging earnings manipulation. Based on the findings, the study concludes that corporate governance plays a pivotal role in safeguarding financial reporting integrity in Nigerian deposit money banks. Independent boards and diligent audit committees provide robust oversight mechanisms that significantly reduce earnings manipulation and enhance stakeholder trust. The study recommends that deposit money banks should strengthen board independence by increasing the proportion of non-executive directors who are free from personal or business ties with management.