Sustainability Reporting and Financial Reporting Quality of Listed Deposit Money Banks in Nigeria

Abstract

The practice of sustainability reporting and the provision of high-quality financial reporting are essential for listed deposit money banks in Nigeria. These practices are instrumental in boosting firm performance, fostering transparency, mitigating information asymmetry and increasing stakeholder confidence. Nevertheless, the persistent challenge of providing stakeholders with relevant and precise financial information remains significant. This study examined sustainability reporting and the financial reporting quality (timeliness and earnings predictability) of listed deposit money banks in Nigeria from 2011 to 2024. Data were obtained from the published audited financial statements of the selected 10 deposit money banks on the Nigerian Exchange Group. Panel fixed estimation, validated through Hausman tests and panel fully modified ordinary least squares estimators are employed to address unobserved heterogeneity, serial correlation and potential endogeneity. The results show that higher sustainability reporting significantly reduces earnings relevance, indicated by lower earnings predictability. The fully modified ordinary least squares further reveal that sustainability reporting is positively associated with reporting lag, highlighting slower reporting in the long run. In addition, firm size improves timeliness but reduces earnings predictability, whereas board meeting frequency does not significantly influence reporting quality. These findings challenge the general assumptions that improved sustainability disclosure directly enhances reporting quality. Instead, they highlight the risk of information overload and weak integration between sustainability and financial reporting frameworks in emerging financial institutions. This study affirms the need for improved integration, standardisation and assurance for sustainability disclosures to strengthen overall reporting quality.