Purchased Goodwill and Financial Performance of Banks in Nigeria
Journal Title: IOSR journal of Business and Management - Year 2018, Vol 20, Issue 10
Abstract
This study investigates the effect of purchased goodwill on return on assets, return on equity and earnings per share of banks in Nigeria. Listed banks were classified into goodwill sample and non-goodwill sample, depending on whether or not the banks had purchased goodwill in their financial statements. Data from annual reports of the goodwill sample from 2012 to 2016 were collated and analysed; and firm performance data from the two samples were compared to determine whether profitability in any sample was significantly higher than the other sample. Results from regression analysis of data from the goodwill sample showed that goodwill was significantly but negatively related to returns of asset, returns on equity, and earnings per share, suggesting that acquisitions in the Nigerian banking sector may have been detrimental to profitability. Comparison of the two samples showed that profitability was not significantly higher in any of the samples. Accordingly, it is recommended that corporate boards should thoroughly examine managerial motives for acquisitions, and ensure that any goodwill booked from business combinations should faithfully represent future economic gains of other assets acquired from the target company.
Authors and Affiliations
Gospel J. Chukwu, Drisu Salifu
Keywords
Related Articles
- EP ID EP413024
- DOI 10.9790/487X-2010025258.
- Views 65
- Downloads 0
Service Quality and Customer Satisfaction in Cellular Telephony in Nigeria
The study examined how service quality or lack of it affects customer satisfaction in the area of Global System of Mobile (GSM) network providers. Cross sectional research survey design was adopted in the study. The popu...
Enhancing Job Engagement through Employee Voice in Nigerian Banking Industry
A key strategy for sustained competitive advantage is to have highly engaged employees. Results from previous researches revealed low levels of employee engagement in organizations. This study investigated how the use of...
Economic Impact of Different Feeding Schemes on Home-Raised Broiler Chickenin Fayoum
The study aims at identify the feeding scheme at which the home-raised broilers is economically effective. Data obtained through an investigation of a random sample of 500 households raising broilers at home using differ...
An empirical analysis of the factors influencing individual investors in the Indian Stock market
Finance and investment amongst the quantified notions have reportedly been unduly impacted by the non-quantified biases. Underscoring the plethora of behavioral biases that affect the decision making process of investors...
Customer Perception towards Banking Services – Post Demonetization
Banking sector plays a key role in the socio-economic development of the country. Banking in India, in the modern sense, originated in the last decades of the 18th century. The nationalized banks are the majority of lend...