Tag Archives: conglomerates

The Effect of Capital Structure on the Financial Performance of Nigerian Quoted Conglomerates (Published)

This study investigated the effect of Nigerian banks’ capital structure on the performance of conglomerates quoted on the floor of the Nigerian stock exchange from 2011 to 2015. The paper identified four levels of dependent variables such as return on assets, ratio (ROA), return on equity ratio (ROE), assets turnover ratio (AT) and earnings per share whereas the independent variable is financial leverage. Essentially the paper sets out to determine the effect of capital structure on the above dependable variables hence return on assets of quoted conglomerates, return on equity of quoted conglomerates, asset turnover of the quoted conglomerates and on the earnings per share of quoted conglomerates. Descriptive statistics and the pooled ordinary least square (POLS) regression analytical method were used for data analysis. The study finds that capital structure has effect on both return on assets and asset turnover of the conglomerates but no effect on return on equity and earnings per share of the conglomerate. It is then concluded that an in-depth analysis of business factors which affect a particular industry should be considered so as to obtain the benefits of the debt-equity mix. The result of the study is in agreement with most previous studies on other sectors that discovered mixed results on the effect of capital structure on financial performance. It is therefore necessary to employ a critical analysis of the appropriate debt-equity mix suitable for the company.

Keywords: Capital Structure, Financial Leverage, POLS, ROA, ROE, conglomerates

AUDITOR INDEPENDENCE AND THE PROVISION OF NON-AUDIT SERVICES–INVESTORS’ PERSPECTIVE IN NIGERIA (Published)

Based on the assumption that non-audit fees compromise auditor’s independence and result in lower quality services, the Sarbarnes-Oxley Act of 2002 bans certain non-audit services for audit clients. The link between non-audit services and required auditor’s independence has been heavily debated by accounting scholars. The purpose of this study is to identify the threats to auditors’ independence, and to examine the relationship between auditor’s independence and non-audit services. The lack of clear definition of auditor independence contributes to the resilience of this debate. The Sarbanes-Oxley Act (2002) prescribed a list of non-audit services essentially to help restore investor confidence in the reliability of financial information. A survey design using well-structured questionnaire was used to collect data. Respondents were sampled from five sectors of the Nigerian economy: Banking, Brewery, Chemical & Paints, Conglomerates, and Health. The non-parametric statistical tests used in this study include the Kruskal-Wallis Test and the Mann-Whitney U Tests to draw inferential conclusions regarding the data collected since the data collected from the different categories of respondents. The findings indicate that the provision of non-audit services significantly affects investors’ perceptions of auditor independence, and there is high correlation between auditors’ independence and non-audit services in Nigeria. To maintain public confidence, auditors should continually assess their standing in the community. Any reduction in confidence in the auditing profession will immediately reflect a lack of confidence in audited financial statements, leading to an overall decline of trust in the country’s capital market.

Keywords: Auditor Independence, Non-audit services, Sarbanes-Oxley Act., conglomerates