The Effect Of Related Party Transactions On Financial Performance Of Quoted Deposit Money Banks In Nigeria
ABSTRACT
This study was conducted to establish the effect of related party transactions on financial performance of quoted deposit money banks in Nigeria, while the specific objectives of the study were to examine how related party transactions affect return on assets, return on equity, profit after tax and earnings per share (which are the measures of financial performance used). Relevant literature was reviewed and this study was anchored on the agency theory. The research design adopted for this study is the ex-post facto research design because the data collected and analyzed were already available before the study was conducted. With respect to data collection, relevant data was collection from the 2013 to 2022 annual reports of eight deposit money banks with international authorization, which incidentally served as the population size and sample size of this study. Using multiple regression analysis with the aid of Stata 13x software, the findings of this study indicated that there is no significant effect of related party transactions on financial performance of quoted deposit money banks in Nigeria. On the basis of this finding, it was concluded that quote deposit money banks do not use related party transactions to bloat their financial performance. Therefore, one of the recommendations given as a result of the findings of this study is that the management of the Nigerian money deposit banks should be inclined towards reducing the number of related party transactions with the view to improving the quality of their earnings. Regulatory authorities should encourage and focus on making sure that Nigerian deposit money banks comply with the standard guiding related party transactions. Standard setting bodies should consider increase the disclosure requirement for related party transactions.