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THE EFFECT OF MERGERS AND ACQUISITIONS ON THE GROWTH OF NIGERIAN BANKS

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THE EFFECT OF MERGERS AND ACQUISITIONS ON THE GROWTH OF NIGERIAN BANKS

 

CHAPTER ONE

INTRODUCTION

 

1.1 Background to the Study

A sound and competent banking sector is essential for a stable macroeconomic environment, therefore, the importance of commercial banks in a country cannot be overemphasized, because they occupy key positions in a country’s financial system and are essential agents that would lead to the growth of any economy (Oloye & Osuma, 2015). Commercial banks also act as the agents of financial intermediation within a country by moving funds between the surplus and the deficit sectors within an economy and they facilitate the implementation of monetary policies.

Banks mobilize and facilitate the efficient allocation of national savings, thereby increasing the quantum of investments and hence national output (Afolabi, 2004). Through financial intermediation; banks facilitate capital formation (investment) and promote economic growth (Olagunju & Adebayo, 2012). Prequel to the above statements, commercial banks have experienced a lot of banking hardship, especially between the decade (1993-2003) which was tagged the era of bank distress which became a source of concern not only to the regulatory bodies (Central Bank of Nigeria, Nigeria Deposit Insurance Commission etc.) but also to the general public and the policy analyst. Therefore, there was a need for the overhaul of the Nigerian banking sector in order to restore the already dying confidence of the general public and other foreign investors who could not sleep with their two eyes closed as a result of the weak financial system that Nigeria operated.

The Central Bank of Nigeria (CBN) as a regulatory body came up with the recapitalization and consolidation exercise in the banking industry under the leadership of the then governor of CBN Professor Charles Soludo who called on banks to increase their paid-up capital through public offers or corporate restructuring exercise (mergers and acquisition) with the view of eradicating the expansion bottlenecks, volatility between the deposit and lending rates and some other constraints faced by the banks. This made some of the commercial banks to consider Merger and Acquisition as a survival strategy. This reform was announced by Professor Chukwuma Soludo on July 6th 2004 that the Nigerian commercial banks should beef up their minimum capital base from N2billion to N25 billion on or before 31st December 2005, with the major objective of creating a sound and a more secure banking system which will strengthen our financial system that depositors can trust. This will enhance the operational capital base of the Nigerian banks. A total of 89 commercial banks were in existence in Nigeria before the announcement in 2004. According to CBN report, 25 banks emerged at the end of the consolidation exercise from the previous 89 banks, while 14 banks liquidated. The 14 banks under liquidation include: Fortune Bank, Gulf Bank, Liberty Bank, Triumph Bank, Metropolitan Bank, Trade Bank, Afex Bank, City Express Bank, Eagle Bank, Societe Generale Bank of Nigeria, Assurance Bank, All State Trust Bank, Hallmark Bank and Lead Bank. The number of banks further declined to 24 in 2007 following the market induced merger of IBTC Chartered Bank PLC with Stanbic Bank Ltd.

Merger and acquisition as a means of corporate restructuring exercise have been known to provide some forms of economic and financial benefits such as; economies of scale, risk diversification, ability to compete locally and internationally with other banks (John & Acha, 2012).

1.2 Statement of Problem

A strong and virile economy depends to a very large extent on a robust, stable and reliable financial system, particularly the banking sector. With the successful recapitalization exercise, commercial banks in Nigeria were expected to be virile and optimally efficient. But how far the exercise has made commercial banks in Nigeria to be virile, sound, strong and efficient so as to maximise their contribution to the growth of the economy is not very clear. It is in the light of the above that this study seeks to evaluate the effects of mergers and acquisitions on the growth banks in Nigeria.

1.3 Research Questions

Based on the problems identified above, the following research questions were raised for the study;

i. Is there any significant difference between Nigerian banks’ capital adequacy before and after merger or acquisition?

ii. Is there any significant difference between Nigerian banks’ return on performing loan before and after merger or acquisition?

iii. Is there any significant difference between Nigerian banks’ return on assets before and after merger or acquisition?

1.4 Objectives of the Study

The broad objective of this study is to examine the effect of mergers and acquisitions on the growth of Nigerian banks. However, the following specific objectives were raised;

i. Examine whether there is a difference between banks’ capital adequacy management before and post-merger.

ii. Determine the difference in pre and post-merger return on performing loans of banks.

iii. Determine if there is a significant difference in banks’ return on asset pre-merger and post-merger.

1.5 Hypotheses of the Study

For the purpose of this study, the following null hypotheses were raised;

H01: There is no significant difference between Nigerian banks’ capital adequacy management before and after merger or acquisition

H02: There is no significant difference between banks pre and post-merger return on performing loans.

H03: There is no significant difference between banks pre and post-merger return on assets.

1.6 Justification of Study

Quite a number of research have been carried out in relation to this topic such as Oloye and Osuwa (2015) who thoroughly examined the impact of mergers and acquisition on the performance of Nigerian banks. In the same vein, many other authors have reviewed similar subjects. This research however seeks to examine deeply the effect of mergers and acquisitions on the performance of commercial banks. The outcome of this study could be beneficial to managers, investors, entrepreneurs and other stakeholders in the Nigerian banking system as it will help to understand and see the importance of synergy which will lead to the better performance of the banks involved and the Nigerian banking system as a whole.

1.7 Scope of the Study

Numerous mergers and acquisitions of banks have taken place since the inception of banking in Nigeria in the year 1896. The most of the mergers and acquisition activities took place in the year 2004-2005 when the Federal Government of Nigeria through the Central Bank of Nigeria enforced a minimum capital base of ₦25 Billion on commercial banks operating in Nigeria. However, due to the distance in time, the mergers and acquisitions that occurred in that time will not be considered but latter M&A. For the purpose of this study, the acquisition and merger activities that occurred between the years 2011-2015 were reviewed.

1.8 Definition of Terms

Mergers: A merger is said to occur when two or more companies combine into one company.

There are two forms of merger; Merger through absorption is a combination of two or more companies into an existing company whereby only one company retains its identity and the rest loses theirs while merger through consolidation is a combination of two or more companies to form a new one. In this type of merger all companies are legally dissolved and a new entity is formed. In a consolidation, the acquired company transfers its assets, liabilities and shares to the new company.

Acquisition: Acquisition may be defined as an act of acquiring effective control over asset or management of a company by another company without any combination of businesses or companies. It is also defined as the process of taking a controlling interest in a business (Dictionary of Finance and Banking).

Takeover: A takeover can be said to be an acquisition. A takeover occurs when the acquiring firm takes over the control of the target firm. In some case it can be said to be an assumption of control of a corporation achieved by buying a majority of its shares (Encarta dictionary), a takeover can also be a conglomerate merger.

Corporate restructuring: Corporate restructuring can also be termed business combination and it includes merger and acquisition (M&A), amalgamation, takeover, leveraged buyouts, capital reorganization, sale of business units and assets etc.

Return on asset: Statistic calculated by dividing a company’s annual earnings by its total assets. It indicates how profitable a company is relative to its total assets (Encarta dictionary).

Return on equity: The return on equity is net profit after tax divided by shareholders’ equity which is given by net worth. This is the net income of an organization expressed as a percentage of its equity capital, i.e. it indicates how well the firm has used the resource for owners (shareholders).

Recapitalization: This is defined as the process of changing the balance of the debt (leverage) and equity financing of a company without changing the total amount of capital. Recapitalization is often required as part of reorganization of a company under bankruptcy legislation.

Consolidation: Consolidation is a combination of two or more companies into a new company. In this form of merger, all companies are legally dissolved and a new entity is created. In a consolidation the acquired company transfers its assets, liabilities and shares to the new company for cash or exchange of shares.

1.9 Plan of the Study

This study comprise chapters one to five.  The chapter one is the introduction which entails the statement of problems, the objectives, the research questions as well as the hypotheses of the study amongst others.  The second chapter is the relevant literature to the study.  The theoretical, empirical as well as the conceptual framework were examined in this chapter. The third chapter, chapter three is the methodology in which the sample size and technique were highlighted. In this chapter, the method of data collection and analysis were indicated. The second to the last chapter, chapter four is the data analysis, presentation and interpretation. Lastly, chapter five comprise the summary, conclusion and recommendations of the study.

 

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7 years ago 0 Comments Short URL

THE IMPACT OF ACCOUNTING INFORMATION SYSTEM ON SMES

ATTENTION:

BEFORE YOU READ THE CHAPTER ONE OF THE PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!

 

INFORMATION:

YOU CAN GET THE COMPLETE PROJECT OF THE TOPIC BELOW. THE FULL PROJECT COSTS N5000 ONLY. THE FULL INFORMATION ON HOW TO PAY AND GET THE COMPLETE PROJECT IS AT THE BOTTOM OF THIS PAGE. OR YOU CAN CALL: 08068231953, 08168759420

 

 

THE IMPACT OF ACCOUNTING INFORMATION SYSTEM ON SMES

 

CHAPTER ONE

INTRODUCTION

 

1.1 Background of the Study

Gilbert, (2011) indicated that businesses are run with shareholders’ capital, long term and short term borrowing whether it is a small or medium enterprise and its performance is mainly measured in terms of profitability. He further reports that business contains exchange of goods and services which generates information for better analysis of business performance which is pivotal to profitability. Due to the nature and peculiarity of the Small and Medium-scaled Enterprises (SMEs), a well-organized, coordinated and operating accounting system will be difficult to maintain or run not forgetting that the most valuable resource an organization has is information which is generated from day-to-day operation of the business (Adebayo, Idowu , Yusuf , & Bolarinwa, 2013). Gilbert, (2011) further proclaimed that it is worthy of note at this juncture that the information derived from the daily transaction needs to be carefully collected or gathered, recorded or stored, processed and analyzed in order to produce meaningful output of decision making. It has been recognized that appropriate accounting information is important for a successful management of any business entity whether large or small (European Commission, 2008).

Accounting information system (AIS) is vital to all organizations Curtis (1995), Wilkinson, Cerullo, Raval and Wong-On-Wong (2000). Curtis, (1995) further elaborated that accounting information system provides a mechanism for proper recording of transactions most especially financial transaction, storage and re-production of information relating to financial flows and positions at a given period of time. It is also a “tool which when incorporated into the field of Information and Technology systems (IT), were designed to help in the management and control of topics related to firms` economic financial area” (Grande, Estanbanez & Colomnia, 2011). The SMEs in a competing business environment may not be able to strive for long time without proper management of its expenditure, cash-flows and also providing information for monitoring and control (Mitchell, Reid & Smith, 2000). This will aid effective budgeting, proper analysis of cost and decision making.

However, as mentioned earlier that by Gilbert, (2011), businesses are run with shareholders’ capital, long term and short term borrowing which should be adequately accounted for and with the accounting system mechanism created, organize a schedule of loan re-payment that will adversely affect the growth and expansion of the SMEs in the long-run as borrowing for expansion and continual existence is inevitable.

Grande, (2011) poses that accounting information system can be used to translate these different dimensions into a common financial dimension. He further claimed that accounting information uses formalized categories for collecting and reporting information that creates a common language with which members of the organization can communicate and also that formalization permits the transmission of information with fewer symbols and this facilitates the coordination between different functions that needs to provide input to the decision-making process. However, accounting information is also an imperfect representation of the underlying decision problem, since not all aspects involved can be quantified perfectly in financial numbers (Galbraith, 1937).

In recent years accounting information system received a lot of attention, it facilitates managers to take appropriate actions related to issues in organization, if AIS output is not accurate, management will take wrong decisions, moreover, it considered competitive advantage for organization with well-designed accounting information system (Majed, Adel, & Alsharayri, 2011).

1.2 Statement of the Problem

Entrepreneurs are known to be the wheel behind the moving train of the Nigerian economy and as we also know that every large business starts small. It’s worthy of note that in spite  the importance and the indispensable nature of  SMEs in Nigeria, a lot of small and medium scale enterprises have not given much attention to book-keeping in relation to their business transaction despite its importance in the success of businesses. This could be as a result of lack of sound knowledge in book-keeping practices by owners or respective managers (Martin, 2005)

Curtis (1995) indicated that there is a difficulty in ascertaining whether comprehensive accounting records that satisfied the laws under which it was incorporated has been kept. He mentioned further that it is also hard to determine, to what extent its adherence to laid down accounting procedure is strictly maintained. Oladipupo and Ajase, (2013) mentioned that difficulty exist in determining how far non-recognition of the necessity of accounting to continued existence and growth, low educational background of entrepreneurs and employment of un-skilled accounting staff, have affected the overall performance of SMEs in Nigeria. They stated further that nevertheless, it’s not clear whether the accounting information derived from daily transactions is actually an important consideration in the overall performance of SMEs.

The primary purpose of this study is to examine critically whether accounting information is an important consideration in the overall performance of SMEs in Nigeria. The secondary purpose of this study is to examine whether the level of skillfulness of the accountant also affects the overall performance of SMEs.

1.3 Research Questions

It becomes imperative to put forward the following research questions so as to ensure a guided focus on the study:

i. What is the relationship between adoption of accounting information system and the benefit they derive?

ii. What is the relationship between the use of accounting information system and the profit after tax of SMEs?

iii. What is the relationship between accounting information system and the overall performance of SMEs?

1.4 Justification for the Study

Quite a number of researches have been carried related to this study such as Sajady, Dastgir and Nejad (2008) who examined the evaluation of effectiveness of accounting information systems on medium scaled companies, Omar and Ali, (2012), who examined the impact of accounting information system in planning, controlling and decision-making processes in small businesses, Grande, (2011), who explored the impact accounting information system has on performance measures. There are however many more researches related to this study but most of them have not really examined the effect accounting information system has on the performance of SMEs in Kwara state. This study however distinct itself from other studies by examining critically the effect adoption of accounting system has on the performance measures of small businesses operating in the study area, Kwara state, Nigeria.

1.5 Objective of the Study

The main objective of the study is to evaluate the impact of accounting information system on SMEs. While the specific objectives are to;

i. Examine the benefits derived by SMEs from the adoption of accounting information system.

ii. Examine the relationship between the adoption of accounting information system and the profitability of SMEs.

iii. Examine the relationship between the adoption of accounting information system and the overall performance of SMEs.

1.6 Hypotheses of the Study

The hypotheses for this study are stated in null forms which are;

i) Ho: There is no significant relationship between adoption of Accounting information System and the benefit derived from it by SMEs.

ii) Ho: There is no significant relationship between the use of Accounting Information System and the PAT of SMEs.

iii) Ho: There is no significant relationship between Accounting Information System and the overall performance of SMEs.

1.7 Scope of the Study

The research work aims at determining the impact of AIS on SMEs operating in Kwara State. Due to insufficient time and other important resources, it was not able to comb through all SMEs operating in the whole of Kwara State but a representative sample was drawn out of the population in order to achieve the research objectives.

1.8 Definition of Terms

Accounting Ratio: The ways of expressing the relationship between one accounting result and another, which is intended to provide a useful comparison.

Financial Statement: These are formal records that outline the financial activities of a business, an individual or any other entity.

Small and Medium Enterprise: The Central Bank of Nigeria (2012) defines SMEs in Nigeria according to asset base and number of staff employed. The criteria are an asset base between ₦5million and ₦500 million, and a staff strength between 20 and 300.

Accounting Information: This is a system of collecting, storing and processing financial and accounting data that is used by decision makers.

Entrepreneur: An individual who exercises initiative by organizing a venture to take benefit of an opportunity and, as a decision maker, decides what, and how much good and services would be produced.

Accounting System: Gilbert, (2011) defined accounting system as an organized set of manual and computerized accounting methods, procedures and control established to gather, record, classify, analyze, summarize, interpret and present accurate and timely financial data for management decisions.

Unskilled Accountant: This is one not having or requiring any special skill or training on accounting job/profession.

Book-Keeping: This is the systematic recording of financial aspects of business transactions in appropriate books of account.

Performance: It is the results of activities of an organization or investment over a given period of time.

1.9 Plan of the Study

To ensure orderliness of the study, the plan of the study was carried out and reported chronologically, under five chapters. Chapter one which is the introduction to the study provided the background to the study, statement of the problem, research questions, justification for the study, objectives of the study, hypothesis of the study, scope of the study, definition and terms and plan of the study. The second chapter contained the review of relevant literatures.  The research methodology is presented in the third chapter and it included headings such as research design, population of the study, sampling techniques, method of data collection and methods of data analysis. The fourth chapter contained the data presentation analysis and discussion of result obtained from the field survey. Chapter five covers the summary, conclusions and recommendation

 

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BANK ACCOUNTS

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 0046579864

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OR

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 2023350498

Bank: UBA.

 

HOW TO IDENTIFY SCAM/FRAUD

As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.

 

But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.

 

Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.

 

No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner

 

CAUTION/WARNING

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That you ordered this material shows you have agreed not to copy word-to-word.

 

 

FOR MORE INFORMATION, CALL:

08068231953 or 08168759420

 

 

 

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7 years ago 0 Comments Short URL

TAX INCENTIVES AS A TOOL FOR ECONOMIC GROWTH OF SMES

ATTENTION:

BEFORE YOU READ THE CHAPTER ONE OF THE PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!

 

INFORMATION:

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TAX INCENTIVES AS A TOOL FOR ECONOMIC GROWTH OF SMES

 

CHAPTER ONE

INTRODUCTION

 

1.1      Background of the Study

Nigeria as one of the developing countries in the world, the growth of Small and Medium Enterprises (SMEs) is very vital for the growth of the economy in general as SMEs account for over 70% of the total business activities in the country. SMEs in most developing countries are usually neglected by both the formal financial institutions and the government unlike the developed countries like China, USA, etc. where SMEs are not taken with levity as they believe were to be the engine room for the development of any economy.

SMEs serve as a source of employment generation, innovation, competition, economic dynamism which ultimately lead to poverty alleviation and economic natural growth (Ariyo, 2005). Apart from SMEs potential for self-reliant industrialization using local raw materials, they are in a better position to boost employment, guarantee even distribution of industrial development and facilitate the growth of non-oil exports. The recent industrial development has focused on sustainable development through small business development. However, it has been observed that tax policy has a very crucial part in the determination of the growth or decline of SMEs. SMEs serve as a source of economic dynamism which ultimately leads to poverty alleviation and natural growth in which tax incentive has a very crucial part to play on the growth and achievement of SME’s long run advantage. Tax incentive is an essential constituent of the general or external business environment of SMEs as it is a tool for motivating prospective and small scale entrepreneurs.

Over the years, SMEs have served as avenue for job creation and the empowerment of Nigeria’s citizens providing about 50% of all jobs in Nigeria and also for local capital formation as cited by Ojochukwu and Stephen (2012). They also further implied in their journal that SMEs have undoubtedly improved the standard of living of so many people especially those in the rural areas. However, the morality rate of these small firms is very high. According to the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), 80% of SMEs die before their 5th anniversary (Kuewumi, 1996). Among the factors responsible for these untimely close-ups are tax related issues ranging from multiple tax burdens.

Taxation system in Nigeria has experienced series of significant dynamism in modern times. The Nigerian tax system experienced this dynamism because of the objective of repelling stale or obsolete provisions and simplifying the main ones. The government tax policy view that large corporations and SMEs are the same. Due to the size and nature of SMEs, they have a unique characteristics which needs to be considered by the government in making tax policies in form of incentives as it can influence the economic growth or decline of the of SMEs. In recent times, tax incentives are given to an extent to SMEs in order to ensure their existence and development. Unfortunately, these incentives also have an adverse effect on the budget of the government as it reduces the expected revenue by the government.

Many countries have introduced investment incentives for varying reasons, in some cases, the incentives may be seen as a counter weight to the investment disincentives inherent in the general tax system.

Investors often emphasize the relative importance of the tax system in investment decisions if compared with other considerations such as political and economic stability, availability of social infrastructure, security of life and property and the general cost of doing business and so on ( Sanni, 2002).

Over the years, both the Federal and State Governments have adopted the use of tax incentives to stimulate economic activity in economically distressed urban and rural locations. Since their inception, social scientists have questioned their effectiveness. The conventional wisdom is that tax incentives particularly for foreign investments are bad, both in theory and in practice because they are often ineffective, inefficient and prone to abuse and corruption. Yet, almost all countries use tax incentives (Easson, 2001).

1.2      Statement of the Problem

Given the huge potential of SMEs in the economy, the need to examine tax incentives as a tool for economic growth of SMEs cannot be over-emphasized. SMEs faces a whole lot of problem after start-up as a large percentage die before they mark their 5th year. A 2001 World Bank survey on Nigeria showed that although 85% of the firms had relationship with banks and government incentives, most of them still had no access to their credit and tax benefit they stand to derive from tax incentives packages (Terungwa, 2011). Government is still battling with how to use tax incentives to enhance domestic investments in SMEs, as they encounter quite a great deal of problem in enabling them which tends to hinder the increase in the contribution of SMEs to the total economy. It is against this background that this research aims to investigate tax incentive as a tool for economic growth of small and medium scale enterprises.

1.3      Research Questions

The research questions raised for the purpose of this study are;

i) What advantages do SMEs derive from tax incentives?

ii) What is the effect of tax incentives on profit after tax (PAT) of SMEs in Nigeria?

iii) What is the relationship between tax incentives and the performance of SMEs in Nigeria?

1.4      Justification of the Study

Quite a number of researches have been carried out related to this study such as Eric and Johnathan (1996), who examined taxation and economic growth, Ojochogwu and Stephen  (2012), who investigated the relationship between tax policy, growth of SMEs and the Nigerian economy with empirical evidences. This research study will distinct itself from other researches carried out by digging deeper into the economic growth of SMEs rather than all other researches that mainly hovers around the impact tax incentive has on SMEs in  general. This research also aims at looking around the effectiveness of tax policy and the dynamism of the Nigerian tax system on SMEs; when tax incentives where offered and when they were not. It also briefly examines the effect that tax incentives have on the government budget in general.

1.5      Objectives of the Study

The main objectives of this study is to check the tax incentives as a tool for economic growth of SMEs. The following specific objectives were raised based on the research questions and they are to;

i) Examine the advantages or benefits SMEs derive from tax incentives.

ii) Evaluate the effect of tax incentives on the PAT of SMEs.

iii) Examine the effectiveness of tax incentive on the performance of SMEs.

1.6      Hypotheses of the Study

Based on the research questions and objectives above, the following hypotheses were formulated. The hypotheses are stated in null forms.

i. H0: There is no significant relationship between tax incentives offered and benefit derived by SMEs

ii. H0: There is no significant relationship between tax incentives and PAT of SMEs.

iii. H0: There is no significant relationship between tax incentives and performance of SMEs.

1.7      Scope of the Study

This research study is limited to tax incentives offered by the government of Nigeria through Nigeria Tax System on the Small and Medium Scaled Enterprises situated and operating in Kwara State. The Ministry of Industry and Solid Minerals Development (2012) put the registered number of SMEs operating in the state at 207 in various sectors ranging from manufacturing, food processing, pharmaceutical, poultry, animal rearing and fabricators.

1.8      Definition of Terms

Small and Medium Scale Enterprises (SMEs): The Central Bank of Nigeria defined Small and Medium Scale Enterprises in according to asset base and in number of staff employed. The criteria are an asset base of ₦5Million and ₦500Million and a staff strength base of 20 to 300 employees.

Tax Incentive: This can be defined as the deduction, exclusion or exemption from a tax liability offered as an enticement to engage in a specified activity (such as investment in capital goods) for a certain period.

Profit after Tax (PAT): This is the net income after interest and tax.

1.9      Plan of the Study

The research report of this study is divided into 5 chapters. Chapter one consist of introduction to the study and it is sub-divided into 9 headings which are background of the study, statement of problem, research questions etc. Chapter two is the literature review which comprise of the conceptual, empirical and theoretical framework. Chapter three is the research methodology which mainly concerns itself about the design of the study, the method of data collection, sample size, sampling technique, method of data analysis and the decision rule. The second to the last chapter, chapter four comprise of the research data presentation and analysis and the last chapter, chapter five is the summary, conclusion and recommendation of the research.

 

HOW TO GET THE FULL PROJECT WORK

 

PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).

 

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After paying the appropriate amount (#5000) into our bank Account below, send the following information to

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(2)     Email Address

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We will send your material(s) immediately we receive bank alert

 

BANK ACCOUNTS

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 0046579864

Bank: GTBank.

 

OR

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 2023350498

Bank: UBA.

 

HOW TO IDENTIFY SCAM/FRAUD

As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.

 

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7 years ago 0 Comments Short URL

INTERNAL CONTROL SYSTEM AS A TOOL FOR EFFICIENCY IN THE MANAGEMENT OF SMALL AND MEDIUM SCALE ENTERPRISES IN ILORIN

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INTERNAL CONTROL SYSTEM AS A TOOL FOR EFFICIENCY IN THE MANAGEMENT OF SMALL AND MEDIUM SCALE ENTERPRISES IN ILORIN

 

CHAPTER ONE

INTRODUCTION

 

1.1 Background to the Study

The concept of internal control is said to trace its history back to the beginning of the 20th century when audit on financial statements came into being, it has consistently evolved to what it is presently due to continuous change in the business environment (Heier, Dogan and Sayers, 2005). The expansion of the world economy and the scale of enterprises growth after the turn of the century brought about major challenges in management leading to adoption of control systems that encompassed the entire enterprise. Xiaofang and HuiliIn (n.d) cited that in 1992, the US Committee of Sponsoring Organizations (COSO) promoted the concept and elements of internal control in its report ‘Internal Control- Integrated Framework’. COSO published ‘ERM-IF’ in 2004, and made the internal control and enterprise management closely integrated by breaking the previous limitations of internal control.

Teketel and Berhanu (2009) made it known that small and medium enterprise (SMEs) constitute currently the major part of economic activities in the world. Nowadays, they represent about 99% of all types of enterprises on the globe and provide high job opportunities to its labour force. Similarly, Ashamu (2014) indicated that micro and small businesses are believed to be the engine room for the development of any economy because they form the bulk of business activities in a growing economy like that of Nigeria.

Jiang (2010) made it known that SMEs are very important force for economic and social development. They play an important part in increasing national income, providing tax revenue and jobs. However, with the development of SMEs, their internal problems are gradually exposed, especially in the financial crisis of 2008, a large number of small and medium enterprises closed down, the reason is: the construction of internal control deficiency of SMEs.

A system of effective internal controls is a critical component of SME management and a foundation for the safe and sound operation of organizations. A system of strong internal controls can help to ensure that the goals and objectives of an SME will be met, that the business will achieve long-term profitability targets and maintain reliable financial and managerial reporting. Such a system can also help to ensure that the SME will comply with laws and regulations as well as policies, plans, internal rules and procedures, and decrease the risk of unexpected losses or damage to the business.

Ishola, Abikoye and Olajide (2015) posited that retail business in which customer have direct access to small product can also benefit enormously from internal control procedure while internal control are crucial from helping you detect dishonesty, it can also help you to reduce risk that simple mistake will keep you from seeing in your organization, concentrate on poverty as detected inadvertent errors, so setting up a system of internal control can keep such problem from getting out of hand. When you have internal control in place, you are protecting your assets as well as the accuracy of the accounting record in proper place of accountability. The type of control to put in place depend largely on the size and nature of the organization i.e. either a private or public sector as in the content of these studies lies on a public sector organization.

According to Chukwu (2012), for an organisation to carry out its business there must be some resources put in place for the smooth running of the organisation like, materials. machines, money etc. These need to be well co-ordinated in order for the success of the organisation to be achieved. These factors are used by a group of persons known as management. Management can neither exist without an organisation as both are inseparable. The system of internal control therefore provides assurances to management on the dependability of the accounting data used in the decision making of the organisation.

1.2 Statement of Problem

Due to the business scale, human resource, financial and its own conditions etc. many SMEs are unwilling to establish the standard internal control system. They believe that establishing internal control system is a high cost method, which will bring heavy burden to the enterprise and maybe without significant results cannot compare with the managers manage all aspects of business directly. Even the SMEs with an established internal control system tend to shy away from monitoring the system as they are of the illusion that the system is working efficiently and optimum benefits is derived from this system. It is against this backdrop this research tend to examine internal control systems established in SMEs as a tool for efficiency in the management of SMEs.

1.3 Research Questions

Based on the problems identified above, the following research questions were raised for this study;

i) What is the relationship between efficient internal control system in SMEs and their overall performance?

ii) Is high cost of operating an internal control system a major reason many SMEs don’t adopt it?

iii) Is internal control system an efficient tool in the management of SMEs?

1.4 Objectives of the Study

The main objective of this study is to ascertain the efficiency of internal control system as a tool for the management of SMEs. However, the specific objectives are to;

i) Establish the relationship that exists between efficient internal control system and the overall performance of SMEs.

ii) Determine whether high cost of operating internal control system is a major reason most SMEs don’t adopt internal control system.

iii) Ascertain if internal control system is an efficient tool in the management of SMEs.

1.5 Hypotheses of the Study

Based on the research questions, the following null hypotheses were formulated.

i) There is no significant relationship between internal control system and the overall performance of SMEs.

ii) High cost is not a major reason SMEs don’t adopt internal control system.

iii) Internal control system is not an efficient tool in the management of SMEs.

1.6 Justification of the Study

Quite a number of research have been carried out in relation to this topic such as Cheruiyot (2014) who carried out a second degree research on effectiveness of internal control systems in safeguarding inventory. In the same vein, Shanmugam, Haat and Ali (2012) examined the impact of internal control on the performance of small and medium enterprises. However, little researchers have sought to examine internal control as a tool of efficient management which will distinguish this research from other studies. This study tends to be very beneficial to a very wide range of stakeholders such as small businesses, medium businesses as well as even large businesses. One need not be told the indirect stakeholders of the outcome of this topic, the Nigerian economy as a whole as it has been observed that SMEs account for over 90% of the businesses in Nigeria.

1.7 Scope of the Study

This research, due to some factors such as funds, time, proximity as well as academic workload, will not be able to encompass all SMEs operating in Nigeria. This study is limited to SMEs operating in Kwara state in which the Ministry of Industry and Solid Minerals Development (2012) put the registered number of SMEs operating in the state at 207 in various sectors ranging from manufacturing, food processing, pharmaceutical, poultry, animal rearing and fabricators. This study will therefore cut across all sectors so as to be able to make appropriate generalizations about the population later in this study.

1.8 Definition of Terms

Small and Medium Scale Enterprises (SMEs): The Central Bank of Nigeria defined Small and Medium Scale Enterprises in according to asset base and in number of staff employed. The criteria are an asset base of ₦5Million and ₦500Million and a staff strength base of 20 to 300 employees.

Audit: This is an independent examination and expression of opinion of the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with statutory requirements and professional obligation.

Internal Auditor: By contrast to the external auditor, the internal auditor is an employee of the SME with the major task of advising management on whether its major operations have sound systems of risk management and internal controls (Putra, 2008).

Internal Control System: The Internal Control System refers to an organized amalgamation of functions and procedures, within a complete system of controls established by the management and whose purpose is the successful function of the business (Cheung 1997).

Small Business Performance: Enterprise performance implies attributes that show changes in volumes of activities or physical size. It indicates the enterprises ability to prevail. When these changes are increasing the performance is generally positive. These attributes include profitability, productivity, employment levels and expansion in physical facilities.

Micro and Small Business: According to Babajide (2011), the MSE nomenclature is used to mean Micro and Small Enterprises. It is sometimes referred to as micro, small and medium enterprises (MSMEs). A small business is any business that is independently owned and managed, started with little capital and is being operated using a few number of employees to produce goods and services to satisfy the needs of the local community for profit.

Management: It is defined as the process of planning, organizing, coordinating and con trolling the activities of an organization. It is seen as a group of people who monitor and control the organization’s activities towards the achievement of the organization’s objectives.

1.9 Plan of the Study

This research comprise five chapters in which chapter one is the introduction. In this chapter, the background to the study and the statement of problem is featured as well as the research questions, objectives and hypotheses. The chapter one also contain the significance of this study and lastly, some of the terms used are defined. The chapter, literature review is the conceptual framework, the theoretical background as well as the empirical evidence. The methodology for the study is conveyed in the third chapter. In this chapter, the research design, the population and sample size, the method of data collection, and data analysis were stated. The penultimate chapter, chapter four, is the data analysis as well as its interpretation while the last chapter is the summary, conclusion and recommendations. In this chapter, suggestions for further research was indicated.

 

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7 years ago 0 Comments Short URL

PERSONAL INCOME TAX ADMINISTRATION; PROBLEM, PROSPECT AND PROCEDURES

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PERSONAL INCOME TAX ADMINISTRATION; PROBLEM, PROSPECT AND PROCEDURES

 

CHAPTER ONE

INTRODUCTION

 

1.1 Background to the Study

The desire to uplift one’s society is the first desire of every patriotic citizen. Tax payment is the demonstration of such a desire. The payment of tax is a civic duty and an imposed contribution by government on their subjects and companies to enable her finance or run public utilities and perform other social responsibilities. Taxes, thus, constitute the principal source of government revenue (Kaibel and Nwokah, 2009).

However, one of the greatest problems facing Nigeria tax system is the problem of tax evasion and tax avoidance. While tax evasion is the willful and deliberate violation of the tax law in order to escape payment of tax which is unquestionably imposed by the law of the tax jurisdiction, tax avoidance is the means by which taxpayer seeks to reduce or remove altogether his liability to tax without actually breaking the law. These “Twin devils” have created a great gulf between actual and potential revenue (Kaibel and Nwokah, 2009).

The tax administrations in Nigeria are weak, corrupt and non-transparent (kiabel, 2009). This inefficiency reflects on the mix of taxes and the faulty design in their structure and in there operational systems (Kiabel, 2009). The tax administration is also affected by policies relating the salary, the attitude, the reward and the punishment system of personnel. The tax administration in Nigeria is driven by detailed revenue targets not by the tax laws and accounting records. The tax officials are allowed to earn money and still meet their revenue targets. Many things are done through negotiation rather than basis of information processing (chartered Institute of Taxation of Nigeria).

In addition, low tax compliance is a serious issue in Nigeria, limiting the capacity of the government to raise revenue for development purposes. It is commonly acknowledged that many factors contribute to this weakness such as corruption, weak legal system, high marginal tax rate, paucity of adequate information, accounting system and ineffective tax administration (chartered Institute of Taxation of Nigeria Website). However, it has never been easy to persuade tax payers to comply with requirement of a tax system.

Furthermore, taxpayer tends to have low level of literacy, low tax morale  and negative attitude towards government. (UNSW Law Research paper no 2009-17). It is therefore felt that personal income taxation in Nigeria requires radical handling to ensure that a large chunk of the taxable population does not escape tax. An effective tax system, aside from maximizing revenue for development is expected to be well structured and managed with a feeling of common purpose, joint responsibility or obligation amongst the taxable person in a country.

From the foregoing, the future prospects of the study can be established. A key component of any tax system is the manner in which it is administered.  No tax is better than its administration, so tax administration matters a lot. An essential of objective tax administration is to ensure the maximum possible compliance by tax payers of income.

In summary therefore, according to Chris and Elizabeth (2001) tax has three basic features namely; a compulsory levy imposed by government, or local authority, for public purpose and to encourage social justice. A tax according to Ayua (1996) is not a voluntary payment but a compulsory pecuniary burden placed on taxpayers for the benefit of the society.

Generally, taxation can be described as a form of levy imposed on all residents living and non-residents doing business within a tax jurisdiction. It is a civic and patriotic responsibility of citizens to pay taxes imposed which also come to the government as income or revenue yielding device to finance the provisions of socio-economic and infrastructural amenities and also to enhance industrial efficiency.

1.2 Statement of the Problem

Over the years, the assessment and collection of personal income tax from taxable individuals has been difficult in the various states in Nigeria. There is apathy not only on the part of the educated but also the uneducated (Kiabel and Nwokah, 2009). The illiterates refuse to pay tax  because they are unaware of the purpose of taxation and therefore regard the tax collector or a tax officer as an instrument of oppression; the rich ones refuse because they are not encouraged, not only by the government which wastes tax payers’ money on white elephant projects, but also the tax officials who live above their means (Kiabel, 2009).

The Nigerian tax system also lacks competent and honest administrators. The problem of tax avoidance and evasion has reached an alarming proportion. The need to improve the administration of our tax system cannot be over emphasized.

1.3 Research Questions

In relation to the problems identified the following questions are asked:

i. Why has there been low revenue from personal income tax?

ii. What are the problems or difficulties encountered by the tax administrators?

iii. What are the possible prospects for personal income tax in Nigeria?

1.4 Objectives of the Study

The broad objective of the study is to examine personal income tax in Nigeria, However, the specific objectives of the study are:

i. To examine the performance and contribution of personal income to Nigeria revenue.

ii. To evaluate the problems associated with personal income tax administration.

iii. To assess the prospects of personal income tax in Nigeria.

1.5 Statement of Hypotheses

The hypotheses for the study are stated here and they are stated in null forms

Hypothesis one

H0: Personal income does not contribute significantly to Nigeria revenue.

Hypothesis two

H0: There are no problems associated with personal income tax administration in Nigeria.

Hypothesis three

H0:There are no prospects for personal income tax in Nigeria.

1.6 Justification for the Study

Although several research works have been carried out on the problems of personal income tax administration in Nigeria but most have not researched on the performance and contribution of personal income tax to the Nigeria revenue profile. This study will broaden this area of research and lay more emphasis on problems and laws revolving around facing personal income tax administration in Nigeria. The possible prospects of personal income tax in Nigeria will also be thoroughly examined and investigate the techniques that are involved in the administration of personal income tax in Nigeria which has been neglected by past researchers.

1.7 Scope of the Study

The population of this study is large, but due to certain factors such as time, financial and academic constraint, this research work will concentrate only on the staff of Kwara state board of internal revenue, Ilorin and other eligible tax payers within Ilorin metropolis.

1.8 Definition of Terms

Tax: A tax can be defined as a compulsory levy imposed by public authority on incomes, consumption, and production of goods and services (Ojo, 2009).

Basis period: This refers to the accounting period of a business where income is assessable to tax in the year of assessment (Ojo, 2009).

Year of Assessment (YOA): This is the period from January 1st to 31st December of the same year. It is the reference year which tax is paid (Ojo, 2009).

Earned Income: This refers to the income derived by an individual from a trade, business, vocation, or employment as well as incomes derived from a previous employment by a way of pension (Ojo, 2009).

Assessment: This refers to the procedure by which tax payable by taxable person or company is computed (Ojo, 2009).

Best of judgment: This is a form of assessment made by relevant tax authority where it occurs that a tax payer has not filed his return for a particular year of assessment, or a taxable person is not registered for tax purpose, and it is in the opinion of the inspector of taxes that the individual income is chargeable to tax for that year of assessment (Ojo, 2009).

Tax avoidance: This is considered as a way of identifying the loopholes in the tax laws and then take advantages of such loopholes to reduce the tax payable (Ojo, 2009).

Tax evasion: This is a deliberate act on the part of the tax payer not to pay tax due (Ojo, 2009)

Self assessment: This is the process whereby tax payers are assessing themselves and filing their returns to the tax authority (Ojo, 2009).

Pay as you earn: This means that tax is deducted from the income of an employee at source. The tax deducted is then remitted to the relevant tax authority on a monthly basis (Ojo, 2009).

1.9 Plan of the Study

To ensure orderliness of the study, the plan of the study was carried out and reported chronologically, under five chapters. Chapter one which is the introduction to the study provided the background to the study, statement of the problem, research questions, justification for the study, objectives of the study, hypothesis of the study, scope of the study, definition and terms and plan of the study. The second chapter contained the review of relevant literatures.  The research methodology is presented in the third chapter and it included headings such as research design, population of the study, sampling techniques, method of data collection and methods of data analysis. The fourth chapter contained the data presentation analysis and discussion of result obtained from the field survey. Chapter five covers the summary, conclusions and recommendations.

 

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7 years ago 0 Comments Short URL

IMPACT OF BUDGETING AND BUDGETARY CONTROL ON THE PROFITABILITY OF SMES NO INTERPRETATION

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IMPACT OF BUDGETING AND BUDGETARY CONTROL ON THE PROFITABILITY OF SMES NO INTERPRETATION

 

CHAPTER ONE

INTRODUCTION

 

1.1 Background to the Study

Wants are numerous while resources are limited but there is every tendency to waste or under-utilise the limited resources by the human factor involved in the production of goods and services. With various companies competing with one another, only few that are able to produce at least possible cost will survive the growing competition in the market.  Therefore, it is paramount for every serious business undertaken to produce at that possible minimum cost so as to remain in business and also achieve the corporate objectives of profitability and stability.  In view of this, there is every need to do a realistic planning of the activities of the firm taking into consideration the limiting factors and the long term objectives of the firm. In order to achieve this, budgeting – a tool of planning and control becomes indispensable. Budgeting is ubiquitous and has long been considered as a necessary tool in managing a company.

Nigeria as one of the developing countries in the world, the growth of Small and Medium Enterprises (SMEs) is very vital for the growth of the economy in general as SMEs account for over 70% of the total business activities in the country. SMEs in most developing countries are usually neglected by both the formal financial institutions and the government unlike the developed countries like China, USA, etc. where SMEs are not taken with levity as they believe were to be the engine room for the development of any economy (Amuche, 2015).

Kendall (2005) posited that budget and budgeting are concepts traceable to the Bible days, precisely the days of Joseph in Egypt. It was reported that nothing was given out of the treasure without a written order. History has it that Joseph budgeted and stored grains which lasted the Egyptians throughout the seven years of famine. Budgets were first introduced in the 1920s as a tool to manage costs and cash flows in large industrial organizations. John (1996), states that it was during the 1960s that companies began to use budgets to dictate what people needed to do. In the 1970s performance improvement was based on meeting financial targets rather than effectiveness companies then faced problems in the 1980s and 1990s when they were not willing to spend money on innovations in order to stay with the rigid budgets, they were no longer concerned about how customers were being treated, only meeting sales targets became essential.

A budget has been defined by Chartered Institute of Management Accountants [CIMA] (2004), as a financial or qualitative statement prepared and approved prior to a defined period of time for the purpose of attaining a given objective.  It may include income, expenditure and the employment of capital. CIMA also defined budgetary control as “the establishment of budgets relating the responsibilities of executives to the requirements of a policy and the continuous comparisons of actual with budgeted results, either to secure by individual action the objectives of that policy or to provide a basis for its revision.

Budgets are known to have an important role to transmit the expectation of top management to lower levels. According to Bremser (2008) budgets are used to communicate management’s expectations to managers and employees. According to Lucey (2003), it is a quantitative expression of plan of action prepared in advance of the period to which it relates, expressed in money terms approved prior to the period.

Lucey (2003) further urges that performance of small and medium sized organization is influenced by many factors which includes planning and coordination, clarification of authority and responsibility, effective communication both internal and external, control of resources available, both human and non-human and motivation of both the lower and middle management. If the actual numbers delivered through the financial year turn to be close to the budget, this actually demonstrates that the organization’s management understand its business and has been successfully driving it in the direction they had planned. On the other hand, if the actual results diverge wide from the budget, this sends out an „out of control‟ signal. For this reason, budget based control means manager’s evaluation according to budgetary goals

1.2 Statement of Problem

Small and medium scale enterprises are the backbone of any economy. Their growth will significantly have an effect of the growth of such economy. Budgets are necessary to prudently manage scarce financial resources and at the same time serve as means of expenditure authorization, control and evaluation base. Profit making organizations consider budgets and budgetary controls important elements in their policy making. It has however been observed that many SMEs do not care about budget or budgetary control. The success of organizations depend largely on good budget preparation and effective budgetary controls. Failure of many small businesses nowadays erupt from the fact that budgets and budgetary control which are the bedrock of any successful business organizations is weak or absent as reported. In line with this argument, the study looks at the impact of budget and budgetary control on the profitability of SMEs.

1.3 Research Questions

Based on the problems indicated above, the following research questions were raised;

i. What is the adoption level of budgeting and budgetary control in small and medium sized businesses in Nigeria?

ii. What are the reasons for SMEs not adopting budgetary control in Nigeria?

iii. What is the effect of budgeting and budgetary control on the profitability of SMEs?

1.4 Objectives of the Study

The broad and general objective for this study is to examine the impact of budgeting and budgetary control on the performance of SMEs in Nigeria. However, to achieve this objective, the following specific objectives were raised;

i. Determine the adoption level of budget and budgetary control by SMEs in Nigeria

ii. Derive the reasons some small and medium-sized business do not adopt budgetary control.

iii. Investigate the effect of budget and budgetary control on the profitability of SMEs in Nigeria,

1.5 Hypotheses of the Study

In order to achieve the stated objectives for this study, the following null hypotheses are stated so that they can be tested with analytical tools and inferences could be drawn on them.

H01: The adoption rate of budget and budgetary control by SMEs in Nigeria is significantly low

H02: There are no significant reasons SMEs in Nigeria do not adopt budget and budgetary control

H03: Budget and budgetary control have no significant impact on the profitability of SMEs in Nigeria.

1.6 Justification of the Study

Budget and budgetary control has been identified has an important factor for the growth of any organization. Hence, various authors have researched on the topic such as Yang (2010) who examined the impact of the budgeting process on performance in small and medium-sized firm amongst many other authors. Quite a lot of this researches all sought to examine the effect budgeting has on performance of SMEs and unfortunately, in many of this research, the authors barely identified the theoretical framework in which the study is supposed to be built on. This study on the other hand will also examine the effect of budget on performance of SMEs but precisely on their profitability. Unlike the other authors, this research has a sound theoretical foundation upon which the literature was built upon. The outcome of this research will be very beneficial to the management of SMEs which invariably will have a significant effect on the economic condition of the country.

1.7 Scope of the Study

It has been established that 70% of the business organizations in Nigeria are small and medium scaled business. Hence, due to the huge amount of SMEs spread all over the country, it will be very impossible to want to examine the entirety. Due to location and proximity of the author, SMEs operating in Kwara state will be examined.

1.8 Plan of the Study

To ensure orderliness of the study, the plan of the study was carried out and reported chronologically, under five chapters. Chapter one which is the introduction to the study provided the background to the study, statement of the problem, research questions, justification for the study, objectives of the study, hypothesis of the study, scope of the study, definition and terms and plan of the study. The second chapter contained the review of relevant literatures.  The research methodology is presented in the third chapter and it included headings such as research design, population of the study, sampling techniques, method of data collection and methods of data analysis. The fourth chapter contained the data presentation analysis and discussion of result obtained from the field survey. Chapter five covers the summary, conclusions and recommendations.

 

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7 years ago 0 Comments Short URL

EVALUATE THE EFFECT OF ENVIRONMENTAL REPORTING PRACTICES AND THEIR PERFORMANCE ON SMES IN ILORIN METROPOLIS, KWARA STATE

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EVALUATE THE EFFECT OF ENVIRONMENTAL REPORTING PRACTICES AND THEIR PERFORMANCE ON SMES IN ILORIN METROPOLIS, KWARA STATE

 

CHAPTER ONE

INTRODUCTION

 

Background of the study

Environmental reporting is an inclusive field of accounting. It provides reports for both internal use, generating environmental information to help make management decisions in pricing, controlling overhead and capital budgeting, external use, disclosing environmental information of interest to the public and to the financial community. Internal use is better termed environmental management accounting (Bartolommeo, Bennett, Bouma, Heydkamp, James and Wolters,  2000). The concept of environmental reporting was introduced in the early 1990s and since then it has rapidly gained acceptance as a means of communicating and demonstrating a company’s commitment to improving corporate environmental performance to its stakeholders (Association of Chartered certified Accountants, 2003).

The historical development of Accounting  attests to the fact that Accounting is a product of its commercial environment and rooted in capitalist ideology. Accounting has scarcely dropped the vestiges of Pacioli’s commercial capitalist era. This disposition of accounting has meant that it destroys its habitat within the ecosystem to the extent that a wide rift now exist between accounting and its environment. In the recent times,  there has been an increased awareness of the interaction between firms and environment in which they operate.  This enlightenment has been sharpened by concerns about resources depletion , resources scarcity, environmental degradation and the sustainability of economic activity have made the development of environmental accounting and reporting an area of significant interest in Nigeria. The success or failure of an organization may be determined not only by the products or services it deals with but also by the complexity of it environment.(Adediran and Alade, 2013).

Recently,  environment has become a very crucial issue not only for personal life but also for business life and hence, environmental movement and environmental reporting practices by different organizations throughout the world have gathered great momentum in recent years. Advancement and improvement of quality environment is the major issue for their activities.(Shil and Iqbal, 2005).

Since environmental pollution in the small and medium scale enterprises(SMEs) is very alarming,  it requires justifying how much they are producing environmental information in their annual reports in creating awareness among the stakeholders. The more environmental information disclosure in annual reports of SMEs, the more awareness is created regarding the environment. (Dutta and Bose, 2008)

Accounting and reporting for the environment has become increasingly relevant to enterprise because how an enterprise’s environmental performance affects its financial health is of increasing concern to investors, creditors, governments and the public at large (UNCTD, 1998).

In recent years, adverse environmental effect on economic development has become matter of great public concern all over the world. Businesses and corporations all over the world are increasingly being made to account for the impact of their activities on the environment (Adekoya and Ekpenyong, 2009). There has been an increasing need for organizations to voluntarily disclose in their annual reports activities that interface between them and the society (Ebimobowei, 2011) but this has not been the case in developing countries as Nigeria.

Uwalomwa (2011) emphasizes that the increasing demands for clear and hard facts about the environmental performance of SMEs by an increasingly well informed breed of stakeholders have made corporate environmental disclosure an essential issue of debate.

Environmental information must be disclosed without impairing the usefulness of environmental reporting. It must meet the information needs of users, good quality must be appropriately guaranteed, and comparability with previous periods and other enterprises must always be ensured.

Given the fact that corporate financial performance is related, in part, to a company’s environmental performance, stakeholders are increasingly paying more and more attention to environmental issues in a company. Investors and financial analysts need environmental information to evaluate overall performance and estimate environmental risk; governments need information to implement environment regulations; and consumers need the information to protect their own rights. As a response, many companies have taken on the responsibility for environmental reporting and disclosure, by which they can  provide information about environmental performance and sometimes corporate social responsibility and sustainable development, meeting the needs of the financial markets and at the same time providing itself with a positive environmental image. (Guo Peiyuan, 2005)

The Annual/Financial Report “is the principal way in which shareholders and others keep themselves informed on the activities, progress and future plans of a company” (Holmes and Sugden, 1998). However the assessment of the impact of environmental issues on company’s financial performance requires changes to the way companies disclose environmental issues in their Annual/Financial Reports.

1.2 Statement of the problem

According to Adekoya and Ekpenyong (2009), the inherent weakness of regulatory framework, inadequate resources for enforcing legislative requirement, insufficient environmental awareness and advocacy, absence of reputable professional bodies, environmental right groups and inadequate commitment to acceptable environmental performance by Nigerian companies have been identified as the factors responsible for poor environmental performance and reporting in Nigeria. Also, environmental accounting have no economic value, the method of estimating the social value of environmental goods and services are imperfect and often misleading. Lack of accounting standards for environmental accounting, lack of reliable industry data, and estimated values for environmental goods quantified or qualified in terms which have no fixed conversion into money  (Murthy, 2014). As productions and consumption volumes have grown following growth in global populations and economies (mainly in developing countries), resource use, energy consumption, and environmental impacts have also become serious problems. Futhermore, as the globalization of financial markets  and the development of international trade are creating complex relationships of interdependence among regions, the establishment of international cooperation structures has become an indispensable task in addressing these problems.  It is also important to know that SMEs in Ilorin metropolis are not immune to the afore mentioned challenges in their day-to-day operations. Hence, it becomes imperative to embark on a study that investigates the degree of effect of environmental reporting on the performance of SMEs in Ilorin Metropolis.

In relation to the problems identified, some research questions that emanated there from are as follows:

What are the environmental factors affecting SMEs success in Ilorin metropolis?

Does environmental reporting influence the profitability of SMEs?

Does insufficient environmental awareness stand as an hindrance to the growth of SMEs?

In what way does environmental reporting contribute to SMEs performance?

1.3. Objectives of the study

The  main objective of this study is to evaluate the effect of environmental reporting practices and their performance on SMEs in Ilorin Metropolis, Kwara state

The specific objectives of the study are to:

(i) identify the environmental factors affecting SMEs success in Ilorin metropolis;

(ii) determine the relationship between environmental reporting and SMEs performance;

(iii) determine how environmental awareness can affect the growth of SMEs; and

(iv) examine the contributions environmental reporting have on SMEs performance.

1.4. Research Hypotheses

The hypotheses to be tested during the course of this study are stated in null (Ho) form.

Ho1: Environmental factors do not significantly affect SMEs success

Ho2: There is no significant relationship between environmental reporting and the performance of SMEs

Ho3: There is no significant relationship between environmental awareness and the growth of SMEs

Ho4: Environmental reporting have no significant contributions towards SMEs performance

1.5. Justification for the study

This study will provide basic information on how environmental reporting practices can be carried out  to improve the performance of SMEs, how such  practices affects the performance of SMEs and also some ways of protecting the environment. Different researches have been carried out at different times in the past on environmental reporting. For instance, Gray, Javad, Power and Sinclair  (2001) examined the relation between cooperate characteristics and environmental disclosures by taking a sample of 100 UK companies drawn from the Centre for Social and Environmental Accounting Research(CSEAR). Deegan and Gordon (1996) examined the environmental disclosure practices of Australian companies revealing low voluntary environmentaldisclosure in Australia. Cunningham and Gadenne (2003) investigated whether an enhancement in environmental reporting acts as a momentum for changes in annual report disclosures behavior and concluded that environment reporting as an impetus forSMEs to include information on certain environmental issues in the annual report. This study will shed more light on the level of performance that SMEs can derive from environmental reporting. It will also investigate the degree of effect of environmental reporting on the performance of SMEs. It will also show if there is any correlation between environmental reporting and performance of SMEs.

1.6. Scope of the study

Due to the fact that geographically Kwara State is highly populated, this work will be within the confine of Ilorin metropolis, concentrating on the growing SMEs around the metropolis. The work is however limited to the environmental reports and factors affecting the performance of SMEs.

1.7. Plan of the study

Chapter one will contain the background of the study, statement of the problem, objectives of the research study, research gap and expected contribution, hypothesis of the study, and scope of the study. Chapter two will contain the literature review, theoretical framework, and the empirical framework.

Chapter three will contain the research design, sources of data, instrument of data collection, population of the study, the sample and sampling size. Chapter four will consist of the presentation and analysis of data. Finally, chapter five will contain summary, conclusion and recommendations based on findings.

1.8. Definition of terms

i. Small and medium scale enterprises: A separate and distinct business entity, including cooperative enterprises and non-governmental organizations managed by one owner or more which, including its branches or subsidiaries, if any, is predominately carried on in any sector or sub-sector of the economy. (National Small Business Act, 1996).

ii. Performance: How bad or well something is done or how bad or well something works. (Oxford Dictionary, 7th Edition)

iii. Environmental reporting: Objective evidence of environmental conditions as a public disclosure. Focused on a firm’s environmental performance information. Very much like public statements of financial performance information. (Black’s law Dictionary.2nd Edition).

 

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7 years ago 0 Comments Short URL

CORPORATE GOVERNANCE AND ITS RELATIONSHIP WITH DIVIDEND POLICIES OF BANKS IN NIGERIAN CAPITAL MARKET

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CORPORATE GOVERNANCE AND ITS RELATIONSHIP WITH DIVIDEND POLICIES OF BANKS IN NIGERIAN CAPITAL MARKET

 

CHAPTER ONE

INTRODUCTION

 

1.1 BACKGROUND OF THE STUDY

The concept of corporate governance is one of the issues that have attracted the attention of researchers and organisation around the world. This is due to the fact that governance mechanisms involves a set of relationship among organisation’s management, its board, its shareholders and other stakeholders that provide structure in which organizational goals  are set, and organizational performance are monitored. Therefore, there is need for proper incentives for the board and management to pursue objectives that are in interests of the company and its shareholders and also, there is need for enhanced effective monitoring (OECD 2004).

The separation of management from ownership gave rise to the adoption of a number of mechanisms globally. These mechanisms ensure enhancement of business sustainability and survival which directly enhance companies’ ability to pay dividend. However, financial regulators everywhere are scrambling to assess these mechanisms and administer them for the purpose of good corporate governance (Sandeep, Patel and Lilicare, 2002).

It is therefore necessary to point out that the concept of corporate governance of banks and very large firms have been a priority on the policy agenda in developed and developing market economies. Several events are responsible for the heightened interest in corporate governance especially in both developed and developing countries. The subject of corporate governance leapt to global business attention from relative vagueness after a string of collapses of high profile companies and banks. In Nigeria, the banking sector among other sectors has also witnessed several cases of collapses, some of which include the Alpha Merchant Bank Ltd, Savannah Bank Plc, Society General Bank Ltd among others.

Although the background of corporate governance in Nigeria can be said to be distorted and obscure, it cannot be detached from company law in general. Before corporate governance became popular, company law recognized and still recognizes two organs of a company namely: the board of director and the company in general meeting. Corporate governance merely emphasizes the greater focus on how a company should be run by those at the wheel of affairs. Unsurprisingly, the importance of the board of directors in instilling the principles of sound corporate governance in every company cannot be denied.

The Nigerian banking industry plays a major intermediation role in the Nigerian economy, considering that they are saddled with the responsibility of mobilizing savings from surplus units to deficit units, particularly private enterprises for the purpose of expanding their businesses (Oghojafor, Olayemi, Okonji and Okolie, 2010). It is also believed that corporate governance practices are important for banks because it results in higher market value, lower cost of funds and increased profit (Claessen, 2006). A major boost for corpor33ate governance in Nigerian banks was the consolidation exercise in 2005 which led to nearly 89 banks reduced to 25 mega banks in order to attain a minimum capital base of approximately 25billion naira. The processes of mergers and acquisitions brought unique governance challenges because of the new size of banks, which made the CBN to issue a mandatory corporate governance codes for Nigerian banks. Some other industries followed suit by introducing these codes in their respective sectors, especially the insurance and pension regulators (Soludo 2004).

Dividend are referred to as rewards for providing finances to a firm, as without any dividend payout, shares would not have any value ( Abdul-Halim & Adel 2013). Earnings distributed to shareholders are also called dividend (Pandey 2004). The need to receive dividend forms part of the primary motive why shareholders buy shares. In subscribing for a firm’s shares, investors always take into consideration a number of factors such as the dividend track record of the firm, the stock price at the floor, profile of board of directors as well as nature of firm’s investment. As a result, management strives to command a fair price for her stocks, while ensuring prompt payment of dividend. As the earnings record of a company improves, increase in cash dividend is expected to follow. The amount of dividend received by shareholders will depends considerably on the dividend policy of such organization. Dividend policy implies the payout policy that management adopts in deciding pattern of cash distribution to shareholders over time. It indicates the share of company’s earnings that are paid out to investors in cash. The study of dividend policy is increasingly becoming interesting for several reasons. First, it affects the capital structure of the firm and also changes the firm’s stock value (Nikolaos, 2005). Secondly, announcement of dividend signals information to investors about the firm’s efficiency in terms of profitability, liquidity and investment opportunity. Thirdly, through cash dividend policy, managers reduce principal-agent relationship costs.

Since the pioneering work of Miller & Modigliani (1958) in their seminal article, series of empirical and theoretical research in dividend policy have emerged and increased tremendously, some relaxing the assumptions of the M & M and offering theories and building models to guide managers formulate their dividend policy decisions. However, empirical evidences from these studies vary considerably. Some suggest that increase in dividend payout increases the firm’s market value, others posited that increase in dividend payout decreases the firm’s value, while some argue that dividend policy does not affect the market value of the firm. In spite of the continuous and increasing theoretical and empirical debate on dividend policy, there is still no generally accepted standard on how firms actually pay out dividend to shareholders at a given time period.

Dividend payment is deemed to be effective corporate governance mechanism that serves to align the interests and minimize agency problems between managers and shareholders. The agency cost refers to the cost borne by shareholders for monitoring behaviour and these cost are considered as implied cost due to the potential conflict of interest among shareholders and corporate managers (Husam ,Nizar & Rekhap, 2012).

Hence dividend policy is one of the most important policies in finance because it is directly related to shareholders. It is considered one of the issues that are still subject of debate among both academics and practitioners. Previous empirical researches shows that better investor protection is associated with greater dividend payout ratios (La Porta, Lopez-De-Silanes and Shleifer, 2008).  This shows that corporate governance is an important mechanism in paying out dividend, and up till now literature on the relationship between corporate governance mechanisms and dividend policy especially in financial firms in Nigeria is limited, therefore, the aim of the study is to fill this gap in empirical data by examining corporate governance and its relationship with dividend policy of banks in the Nigerian capital market.

1.2 STATEMENT OF THE PROBLEM

In Nigeria, before the consolidation exercise, the banking industry had about 89 active players whose overall performance led to sagging of customers’ confidence. There was lingering distress in the industry, the supervisory structures were inadequate and there were cases of official recklessness amongst the managers and directors, while the industry was notorious for ethical abuses (Akpan, 2007). Poor corporate governance was identified as one of the major factors in virtually all known instances of bank distress in the country. Weak corporate governance was seen manifesting in form of weak internal control systems, excessive risk taking, override of internal control measures, absence of or non-adherence to limits of authority, disregard for cannons of prudent lending, absence of risk management processes, insider abuses and fraudulent practices remain a worrisome feature of the banking system (Soludo, 2004). This view is supported by the Nigeria Security and Exchange Commission (SEC) survey in April 2004, which shows that corporate governance was at a rudimentary stage, as only about 40% of quoted companies including banks had recognised codes of corporate governance in place. This, as suggested by the study may hinder the public trust particularly in the Nigerian banks if proper measures are not put in place by regulatory bodies.

Corporate governance is an important mechanism in paying out dividend. The going concern assumption of corporate entities gave rise to the need for corporate governance to enhance business sustainability and survival which directly enhance companies’ ability to pay dividend. If the survival of a firm be it bank or non-bank corporation is threatened, the ability of such a firm to pay dividend is affected and this also has a tremendous effect on the stakeholders of such a firm. Where such firm is a bank, the shareholders as well as depositors of the bank may suffer huge losses. As a result, the confidence of both investors and depositors would take a downward plunge and this has consequence on the nation’s economy.

The Central Bank of Nigeria (CBN) in July 2004 unveiled new banking guidelines designed to consolidate and restructure the industry through mergers and acquisition. This was to make Nigerian banks more competitive and be able to play in the global market. However, the successful operation in the global market requires accountability, transparency and respect for the rule of law. In section one of the Code of Corporate Governance for banks in Nigerian post consolidation (2006), it was stated that the industry consolidation poses additional corporate governance challenges arising from integration processes, Information Technology and culture.

The code further indicate that two-thirds of mergers world-wide failed due to inability to integrate personnel and systems and also as a result of the irreconcilable differences in corporate culture and management, resulting in board of management disputes.

Despite all these measures, the problem of corporate governance still remains unresolved among consolidated Nigerian banks, thereby increasing the level of fraud (Akpan, 2007). Data from the National Deposit Insurance Commission report (2006) shows 741 cases of attempted fraud and forgery involving N5.4 billion. Soludo (2004) also opined that a good corporate governance practice in the banking industry is imperative, if the industry is to effectively play a key role in the overall development of Nigeria. Caprio, Laeven & Levine (2008) opined that there should be a revision of bank supervision and corporate governance reforms to ensure that deliberate transparency reductions and risk mispricing are acted upon.

Furthermore, according to Sanusi (2010), the current banking crises in Nigeria, has been linked with governance malpractice within the consolidated banks which has therefore become a way of life in large parts of the banking sector. He further opined that corporate governance in many banks failed because boards ignored these practices for reasons including being misled by executive management, participating themselvhes in obtaining unsecured loans at the expense of depositors and not having the qualifications to enforce good governance on bank management.

The boards of directors were further criticized for the decline in shareholders’ wealth and corporate failure. They were said to have been in the spotlight for the fraud cases that had resulted in the failure of major corporations.

The series of widely publicized cases of accounting improprieties recorded in the Nigerian banking industry in 2009 were related to the lack of vigilant oversight functions by the boards of directors, the board relinquishing control to corporate managers who pursue their own self-interests and the board being remiss in its accountability to stakeholders. Some of these banks were Oceanic Bank, Intercontinental Bank, Union Bank, Afri Bank, Fin Bank and Spring Bank (Uadiale, 2010). As a result, various corporate governance reforms have been specifically emphasized on appropriate changes to be made to the board of directors in terms of its composition, size and structure (Abidin, Kamal and Jusoff, 2009).

Another major issue that has generated interest and which may  affect dividend policy and should be of interest to all stakeholders in banking system is the Chairman of the Board of Directors serving as Chief Executive Officer (CEO). This no doubt, could present potential conflicts resulting from a single individual functioning in these dual roles. To ensure the protection of shareholders’ interest, a suitable governance structure that has been advocated is the one where the Chairman of the Board is not the same person as the CEO (OECD 2004).

Also, the need for banks to continue to recognize internal and external auditors as an important part of the corporate governance process cannot be overemphasized. Adequate internal control system continues to be a major problem to banks in Nigerian capital market and this is needed to help discipline banks in their daily business by ensuring compliance with internal and external regulations as well as help the board to effectively evaluate the bank’s risks and ultimately its future strategy (Basel Committee on Banking Supervision 2006).

It is in the light of the above problems that this research work seeks to answer the following questions:

Research Questions

i) Is there a relationship between board size and the dividend policy decision of banks in Nigeria Capital market?

ii) To what extent does the CEO duality affect the dividend policies of banks in Nigeria?

iii) Is there a relationship between composition of board of directors and the dividend policy of banks in Nigerian capital market?

iv) What is the relationship between the audit committee of Nigerian banks and their dividend policies?

1.3 OBJECTIVES OF THE STUDY

The main objective of this study is to examine corporate governance and its relationship with dividend policies of banks in Nigerian capital market. The specific objectives include:

i) To examine the relationship between board size and the dividend policy of quoted banks in Kwara State, Nigeria.

ii) To examine how CEO duality affects the dividend policy of quoted banks in Kwara State, Nigeria.

iii) To examine the relationship between the board compositions and dividend policy of quoted banks in Kwara State, Nigeria.

iv) To examine the relationship between the audit committee and dividend policy of quoted banks in Kwara State, Nigeria.

1.4 JUSTIFICATION OF THE STUDY

Various research works have been carried out on corporate governance and dividend policies of banks all over the world, in various countries, Nigeria included. These research works include: (Nwidobie 2013; Kurawa 2013; Odia and Osikhena 2012; Amarjit and John 2012; Bokpin 2011; Morad and Adel 2010, etc.) and these research works show that corporate governance is an important mechanism in paying out dividend. Up till now, literature on the relationship between corporate governance mechanisms and dividend policy especially in financial firms in Nigeria is limited. Therefore, the aim of the study is to fill this gap by examining corporate governance and its relationship with dividend policy of banks in the Nigerian capital market.

This study is of immense significance to banks, bank regulators, investors, academics and other relevant stakeholders. This study provides a picture of where banks stand in relation to the codes and principles on corporate governance introduced by the Central Bank of Nigeria. It further provides an insight into understanding the degree to which the banks that are reporting on their corporate governance have been compliant with different sections of the codes of best practice and how these corporate governance practices affect the dividend policy of these banks. Furthermore, this study will contribute to the existing literature and serve as reference point to further studies in this area of research.

1.5 HYPOTHESIS OF THE STUDY

The following null hypotheses will be tested to aid this study in achievement of its objectives:

Ho 1: There is no significant relationship between board size and dividend policy of quoted banks in Nigeria.

Ho 2: There is no significant relationship between board composition and dividend policy of quoted banks in Nigeria.

Ho 3: There is no significant relationship between CEO duality and dividend policy of quoted banks in Nigeria.

Ho 4: There is no significant relationship between audit committee and dividend policy of quoted banks in Nigeria.

1.6 SCOPE OF THE STUDY

This research work basically examines corporate governance and dividend policy of all quoted banks in Nigerian capital market between the period of 2004 and 2015.

1.7 PLAN OF THE STUDY

This research work contains five chapters. Chapter one contains the introduction and it comprises of background to the study, statement of the problem, research questions, objectives of the study, justification of the study, hypothesis of the study, scope of the study, plan of the study and definition of terms.

Chapter two contains the literature review, which comprises of the conceptual framework, theoretical framework, empirical framework of corporate governance and dividend policy.

Chapter three covers the research methodology which includes types and sources of data, population of the study, sample technique and sample size, method of data collection and method of data analysis.

Chapter four focuses on the data analysis and data presentation, as well as discussion of the results.

Chapter five consists of summary, conclusions and recommendation of the study.

1.8 DEFINITION OF TERMS

Corporate Governance:

Corporate governance refers to the set of responsibilities and practices exercised by the board and executive management with the goal of providing strategic direction, ensuring that objectives are achieved, standards are maintained, ascertaining that risks are managed appropriately and verifying that the organization’s resources are used responsibly. Corporate governance ensures transparency, fairness and accountability and it is a benchmark for the integrity and credibility of organizations.

Dividend:

Dividends are referred to as rewards for providing finances to a firm. Earnings distributed to shareholders are also called dividend. Without any dividend payout, shares would have no value.

Dividend Policy:

Dividend policy is the set of rules which guide management in the distribution of profits to ordinary shareholders as dividends. Dividend policy is the policy used by a company to decide how and how much it will pay out to shareholders in dividends.

Banking Sector:

The Nigerian banking sector is saddled with the responsibility of mobilizing savings from surplus units to deficit units. The banking sector consists of the banking institutions in the financial system. Banks are the key institutions maintaining the financial system of the economy. The stability is of the banking sector is essential as it has a profound impact on the entire economy as a whole.

Capital Market:

Capital market is a market where securities are traded. Capital market as an exchange system set up to deal in long-term credit instrument of high quality. The dealing in this high quality instrument facilitates the execution of some desirable and profitable project bearing direct relationship with economic development.

CEO Duality:

This is a situation where the chairman of the board of directors is also serving as Chief Executive Officer (CEO). CEO duality means that a single individual is functioning in these dual roles.

 

HOW TO GET THE FULL PROJECT WORK

 

PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).

 

HOW TO RECEIVE PROJECT MATERIAL(S)

After paying the appropriate amount (#5000) into our bank Account below, send the following information to

08068231953 or 08168759420

 

(1)    Your project topics

(2)     Email Address

(3)     Payment Name

(4)    Teller Number

We will send your material(s) immediately we receive bank alert

 

BANK ACCOUNTS

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 0046579864

Bank: GTBank.

 

OR

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 2023350498

Bank: UBA.

 

HOW TO IDENTIFY SCAM/FRAUD

As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.

 

But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.

 

Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.

 

No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner

 

CAUTION/WARNING

Please, DO NOT COPY any of our materials on this website WORD-TO-WORD. These materials are to assist, direct you during your project.  Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy.

 

That you ordered this material shows you have agreed not to copy word-to-word.

 

 

FOR MORE INFORMATION, CALL:

08068231953 or 08168759420

 

 

 

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7 years ago 0 Comments Short URL

ASCERTAIN IF ADVERTISING EXPENDITURE IS VALUE RELEVANT

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ASCERTAIN IF ADVERTISING EXPENDITURE IS VALUE RELEVANT

 

CHAPTER ONE:

INTRODUCTION

 

1.1 Background to the Study

In recent years, much attention has been paid to whether certain expenditures generate intangible assets, and how these expenditures should be accounted for in financial statements (see, for example, Lev, 2001; Hand & Lev, 2003). However, relatively little attention has been given to advertising activities as possible creators of intangible assets (Shah, Stark & Akbar, 2009).

Advertising expenditure is found to be effective in creating awareness, enhancing consumer knowledge, and influencing both short-term and long-term consumer preferences and loyalty, thereby generating additional revenue. As a consequence, advertising is believed to have an indirect impact on firm value through an increase in sales and profits, as well as a direct effect by virtue of building brand-related intangible asset (see e.g., Graham & Frankenberger, 2000). Despite the significant economic importance of advertising expenditures in building brand equity and its potential impact on future cash flows, significant considerations have not been given to treating advertising expenditure as an intangible asset. Advertising expenditure in Nigeria as a case study, according to the International Accounting Standard, IAS 38, requires expenditure on advertising to be written off as incurred by companies. This study in essence, aims at investigating the relationship between advertising cost and relevant variables such as sales and profit of selected listed firms in Nigeria to conclude on its value relevance which further serves as a basis for determining its accounting treatment – to expense or to capitalize.

1.2 Statement of the Problem

There has been a controversy as to the treatment of advertising expenditure. While some studies are of the view that advertising should be capitalized, other studies suggest otherwise. These equivocal views have therefore called for a need for more research to be made on advertisement treatment. For instance some researchers believe that advertising cost should be capitalized (e.g. Qureshi, 2007; Shah et al., 2009). In their view, since investment in advertising would benefit current as well as future periods, the cost should be recorded as an intangible asset and amortized against current and future revenues. On the other hand, the dominant accounting practice is to charge advertising expenditure to current expenses, producing an implicit rate of amortization of 100%. This practice has its advantages such as tax benefit considerations, conservatism, and a lack of other acceptable and nonarbitrary systems of amortization. In addition to the the controversy of capitalizing or expensing, companies willing to capitalize face the major challenge of their inability to accurately estimate all costs associated with advertising as well as the future benefits accrued from it. They therefore prefer to write off the cost incurred against the current profit for that period which is more certain rather than risking amortising it against future profits which might be unable absorb it.

However, inappropriate recognition of advertising cost goes against the International Accounting Standard regulation which requires that the purpose of financial accounting is to provide users of financial statement with information that is useful for efficient decision making. Financial statements should therefore provide accurate and reliable information to assist potential and present investors, creditors, and other users in making rational investment, credit and similar decisions. It is therefore of great importance to conclude whether advertising benefits spread across multiple periods. If so, it would be therefore appropriate to capitalize it.

This research therefore seeks to examine and conclude on the best possible treatment of advertisement cost based on its value relevance. The general question here is, is advertising expenditure value relevant?

1.3 Research Questions

The following are the specific research questions:

1) Is there a relationship between advertising expenditure and companies sales?

2) Is there a relationship between advertising expenditure and companies profits?

1.4 Justification for the Study

Results of previous studies about the value relevance of advertising expenditure are contradictory. Even though most studies find that advertising expenditures are positively related to market value (e.g., Graham & Frankenberger, 2000; Qureshi, 2007; Shah et al., 2009), a number of studies indicate that advertising expenditures do not have an impact or has a negative impact on market value (e.g., Core et al., 2003; Han & Manry, 2004; Heimonen & Uusitalo, 2009). The inconsistency in the results of the above studies is one tangible reason for this one.

To add to, few researches on the value relevance of advertising cost have been carried out in Nigeria and also a detailed method of treatment of advertising cost as an intangible method is nonexistent in previous studies.

Furthermore, the results of this study may be of interest to firms accounting policy makers. Since one of their key purposes is to ensure that the financial statement is accurate and reliable, based on this study, they may wish to re-evaluate their disclosure policy on advertisement cost.

1.5 Objectives of the Study

The main objective of the study is to ascertain if advertising expenditure is value relevant.

However, the specific objectives are to:

a) Determine if advertising expenditure incurred in a year affect sales revenue beyond that year.

b) Assess if advertising expenditure incurred in a year affect profitability beyond that year.

1.6 Hypotheses of the Study

The following hypotheses are formulated and stated in the null form for the purpose of this study.

Ho1: Advertisement cost does not affect sales beyond the year in which it is incurred.

Ho2: Advertisement cost does not affect profitability beyond the year in which it is incurred.

1.7 Scope of the Study

This study shall be concerned with the effect of advertising on the sales revenue and net profit of the selected listed companies in Nigeria. A period of five years would be adopted for the study ranging from the year 2011 to 2015 both years inclusive. The choice of the period is based on the relevance of the data involved as these are the years in which the adoption of the International Accounting Standards in the preparation of financial statements are most encouraged and practised.

1.8 Definition of Terms

Advertising expenditure: The total amount of money spent by a firm on product announcements and promotion, usually per year.

Capitalization: The treatment of a cost as a non current asset instead of an expense, therefore exposed to depreciation or amortization annually in the statement of financial position.

Expensing: The treatment of a cost as an operating cost rather than a capital investment therefore offset against the income in the comprehensive income statement.

1.9 Plan of the Study

Chapter one of the study gave an overview to a reader what the whole research is all about. Chapter two shall be about various observations from past studies as well as underlying concept related to the study. Chapter three shall discuss basically, the research methodology while chapter four shall analyse and present the data and finally, the research shall be rounded up with chapter five which summarizes, concludes and gives recommendations regarding the study.

 

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7 years ago 0 Comments Short URL

EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON THE PERFORMANCE OF THE NIGERIAN BANKING SECTOR

 

ATTENTION:

BEFORE YOU READ THE CHAPTER ONE OF THE PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!

 

INFORMATION:

YOU CAN GET THE COMPLETE PROJECT OF THE TOPIC BELOW. THE FULL PROJECT COSTS N5000 ONLY. THE FULL INFORMATION ON HOW TO PAY AND GET THE COMPLETE PROJECT IS AT THE BOTTOM OF THIS PAGE. OR YOU CAN CALL: 08068231953, 08168759420

 

 

EFFECT OF CORPORATE SOCIAL RESPONSIBILITY ON THE PERFORMANCE OF THE NIGERIAN BANKING SECTOR

 

CHAPTER ONE

INTRODUCTION

 

1.1 Background to the study

The last twenty years have seen a radical change in the private sector’s relationship both with the state and the civil society. Globalization, deregulation, privatization, and the withdrawing of line between state and market have changed the basis on which private enterprise is expected to contribute to the public goods. Meanwhile, the relationship between company and civil society has move from being paternalistic philanthropy to re- examination of roles, rights and responsibilities of business in society (Alawiye and Babatunde, n.d).

In the Nigeria society, corporate social responsibility (CSR) has been a highly contemporary issue to all stakeholders including the government, the corporate organization itself, and the general public (Olanrewaju, 2012). Corporate social responsibility is an integral part of business corporations as it not only provide support to beat business competitors but also provide help to grow the business in the society. So by focusing on the financial success and community growth, the company can increase it performance rapidly as compare to their competitors.   Commercial banks in Nigeria today adopts corporate social responsibility not only as a philanthropy spending but as a social investment and environmental sustainability, it has also become a normal practice by banks to disclose on the face of financial statements how much they have spent on CSR pertaining to donations and charitable gifts.

Many researchers tend to focus on societal benefit of CSR neglecting the impact on the organization itself. Today management of banks have found the need to provide for environment in which they operate and hence need to evaluate the corporate social responsibility engaged in them on their performance. According to Pierre, Timothy, George and Garry (2009) organizational performance encompasses three specific three areas of firm outcomes: (a) financial performance (profits, return on asset, return on investment, etc); (b) product market performance (sales, market share etc); (c) shareholders return (total shareholders return, economic value added etc). Therefore this study propose to measure the organizational performance in three aspect, using banks profit, turnover and earnings per share (EPS).

1.2 Statement of the problem

According to Robbins (2005), manager of banks are often faced with the challenge of determining how socially responsible their banks are particularly with the increased competition in the banking industry. There have been arguments that managers should integrate economic, social and environmental concerns into their business strategies. Recognizing the potential benefit of improve public relations, many banks publicizes their dedication to corporate social responsibility, and provides stockholders with a formal report of their corporate social responsibility accomplishment. However many researchers have come out with different view on the influence of corporate social responsibility has on the organization in terms of performance. Therefore this study proposed to examine the impact of CSR on organization performance in Nigeria banks.

1.3 Research Question

i. Is there any relationship between corporate social responsibility spending and Nigerian banks profitability?

ii. Does corporate social responsibility spending have any influence on the turnover of Nigerian banks?

iii. Does corporate social responsibility spending have any impact on the earnings per shares of Nigerian banks?

1.4 Research Objectives

i. To examine the relationship between the spending on corporate social responsibility and profitability in the Nigeria banking sector.

ii. To investigate the influence of corporate social responsibility spending on turnover of Nigerian banks.

iii. To examine the effect of corporate social responsibility on earnings per share (EPS) of Nigerian banks.

1.5 Research Hypotheses

Ho1: There is no relationship between corporate social responsibility spending and

Profitability on Nigerian banks.

Ho2: Corporate social responsibility does not have any impact on turnover of Nigerian

banks.

1.6 Justification for the Study

Several researches have been carried out on corporate social responsibility of firms but focuses on the social and environment benefit in which the firm operate. Thus this research will consider the effect corporate social responsibility has on the performance of banks in Nigeria. Also previous researches have been done on organizational performance in other sectors also using different variables but for the purpose of this research the effect of CSR on organizational performance will be review on profit, turnover and earnings per share (EPS) of Nigerian banks.

The study will also contribute to the existing knowledge of corporate social responsibility and its effects on organizational performance of Nigerian banks and will also create an avenue for further researches on CSR and organizational performance.

1.7 Scope of the Study

This study will cover 6 selected banks in Nigeria and will access the financial report of these banks for 5years which will be from period 2011 to 2015.

1.8 Definition of Terms

CSR: This is the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large.

Organizational Performance: This comprise of the actual output or result of an organization as measured against its intended outputs (or goals and objectives)

Bank: A bank is a financial establishment that uses money deposited by customers for investment, pays it out when required, makes loans at interest, and exchanges currency.

1.9 Plan of the Study

Chapter one will discuss the general overview of the study. This will include the background to the study, statement of the problem, research question, objective of the study, hypothesis of the study, justification of the study, scope of the study, definition of term and the plan of the study for chapter two shall contain the review of relevant literature on different concepts, theories and empirical evidence. Chapter three will discuss the methodology and techniques to be adopted for the study and chapter four will deal with data presentation, analysis and findings discussion. Chapter five will be on the summary, conclusion and recommendations of the study.

 

HOW TO GET THE FULL PROJECT WORK

 

PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).

 

HOW TO RECEIVE PROJECT MATERIAL(S)

After paying the appropriate amount (#5000) into our bank Account below, send the following information to

08068231953 or 08168759420

 

(1)    Your project topics

(2)     Email Address

(3)     Payment Name

(4)    Teller Number

We will send your material(s) immediately we receive bank alert

 

BANK ACCOUNTS

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 0046579864

Bank: GTBank.

 

OR

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 2023350498

Bank: UBA.

 

HOW TO IDENTIFY SCAM/FRAUD

As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.

 

But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.

 

Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.

 

No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner

 

CAUTION/WARNING

Please, DO NOT COPY any of our materials on this website WORD-TO-WORD. These materials are to assist, direct you during your project.  Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy.

 

That you ordered this material shows you have agreed not to copy word-to-word.

 

 

FOR MORE INFORMATION, CALL:

08068231953 or 08168759420

 

 

 

AFFILIATE LINKS:

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7 years ago 0 Comments Short URL