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1. HUMAN CAPITAL DEVELOPMENT AND QUALITY OF FINANCIAL STATEMENTS OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA AISHA HASHIM MUSTAPHA 2763       A DISSERTATION SUBMITTED TO THE SCHOOL OF POSTHRADUATE STUDIES IN SKYLINE INIVERSITY KANO, IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA)

2. Background to the Study Human Capital Development (HCD) involves recognizing and valuing the economic value of an organization's human resources. Its relevance to financial reporting, especially in the banking sector, has been increasingly acknowledged globally. These findings highlight the importance of integrating human capital information into financial reporting for banks. In the Nigerian context, the integration of human capital into financial statements remains limited. However, there is growing recognition of its significance. The International Financial Reporting Standards (IFRS) acceptance of fair value measurement for assets suggests a future need to recognize human resource assets in financial reporting ( Bullen & Eyler , 2013). This study is motivated by the tendency for unethical practices in accounting, emphasizing the need to reflect the cost of human capital in financial reports to maintain reporting quality

3. Statement of the Problem The lack of standardized methods for reporting human capital in financial statements leads to inconsistencies in actual investment in human capital, making it difficult for stakeholders to assess the true value and impact of human capital on reporting quality of financial statement. These research gaps further underscore the complexities and challenges of integrating human capital accounting into the financial statements of quoted deposit money banks in Nigeria, emphasizing the need for improved reporting standards and practices. The study utilized human capital theory alongside signaling theory, which has been underrepresented in previous research on this topic. Unlike past studies that focused on the effect of human capital development on reporting quality of financial statement, this research specifically examine the relationship between human capital accounting and quality of financial statements of quoted deposit money banks in Nigerian.

4. Research Questions To give this research work a meaningful direction, the above objectives of the study have been operationalized into the following investigative research questions. To what extent does personnel cost affect the quality of financial statements of quoted deposit money banks in Nigeria? To what extent does the training cost affect the quality of financial statements of quoted deposit money banks in Nigeria? How does retirement benefit affect the quality of financial statements of quoted deposit money banks in Nigeria? To what extent do executives’ earnings affect quality of financial statements of quoted deposit money banks in Nigeria?

5. Objectives of the Study The main objective of this study is to examine the relationship between human capital development on quality of financial statements of quoted deposit money banks in Nigeria. While the specific objectives were to: Examine the effect of personnel cost on quality of financial statements of quoted deposit money banks in Nigerian, Evaluate the effect of training costs on quality of financial statements of quoted deposit money banks in Nigerian, Access the effect of retirement benefits on quality of financial statements of quoted deposit money banks in Nigerian and Investigate the effect of executives’ earnings on quality of financial statements of quoted deposit money banks in Nigeria.

6. Statement of Hypotheses To give this research work a direction; the above objectives of the study are operationalized into the following null hypotheses: H O1 : Personnel cost has no significant effect on quality of financial statements of quoted deposit money banks in Nigerian, H O2 : Training cost has no significant effect on quality of financial statements of quoted deposit money banks in Nigerian, H O3 : Staff retirement benefit has no significant effect on quality of financial statements of quoted deposit money banks in Nigerian and H O4 : Executives’ earnings have no significant effect on quality of financial statements of quoted deposit money banks in Nigerian.

7. Scope of the Study This study examines human capital development and the quality of financial statements in quoted deposit money banks in Nigeria from 2019 to 2023. It aims to assess the impact of human capital accounting practices on the reliability, relevance, comparability, and faithful representation of financial statements. Recognizing human capital as a critical asset, the study emphasizes incorporating human resources into financial reporting. As regulatory standards like IFRS evolve to include comprehensive asset reporting, the study offers insights on adapting reporting practices to meet these standards. It highlights how understanding the impact of human capital accounting can help managers optimize human resource investments and strategies, enhancing organizational performance and competitiveness. Using secondary data and regression analysis, the research provides empirical evidence on the relationship between human capital accounting and financial statement quality, filling a significant research gap. It offers context-specific insights for the Nigerian banking sector, aiming to improve the transparency and usefulness of financial information for investors, analysts, and other stakeholders.

8. THEORY Studying Human Capital Development (HCD) through the lens of Signaling Theory offers valuable insights into how organizations and individuals communicate and validate human capital investments and capabilities. Signaling Theory addresses the issue of information asymmetry by examining how signals (such as certifications or degrees) convey the value of intangible assets like skills and knowledge. It helps evaluate the effectiveness and credibility of these signals, the cost-benefit analysis of human capital investments, and their impact on organizational performance. This theory aids in understanding how signals influence recruitment, promotion, and compensation decisions, leading to more effective reporting and transparency. Additionally, it helps organizations shape their human capital strategies and identify potential issues with signaling, such as manipulation or misinterpretation. Overall, Signaling Theory provides a comprehensive framework for analyzing the communication, valuation, and management of human capita

9. METHODOLOGY The study adopted Ex-post facto research design. The population of this study covers the entire 14 quoted deposit money banks in Nigeria, quoted on the Nigerian Exchange Groups on 31st December 2024. Data were collected mainly from secondary sources. The data were regarding the variables’ of the study were collected from C.B.N and Nigerian Deposit Money Banks especially the fourteen deposit money Banks under study from their web site. The study data were analysed using descriptive and inferential statistical techniques. The descriptive statistics include the mean, median, standard deviation, minimum and maximum values of the data. The methods adopted for this research allows for comparison to be made within the sample distribution to examine how one variable affects the other. It provides much room as possible to make the researcher independent of the data being analyzed and applies logical reasoning hence arriving at objective conclusions

10. Conclusion Based on the results and the hypotheses tested, the following conclusion were drawn upon. Personnel Cost (PC). Personnel Cost has a statistically significant positive effect on Discretionary Accruals (DACC), indicating that higher personnel costs are associated with higher reporting quality of financial statements. This suggests that investing in staff remuneration can enhance the overall reporting quality of financial statements of quoted deposit money banks in Nigeria. Training Cost (TC). Training Cost has a statistically significant positive effect on Discretionary Accruals, implying that investments in employee training contribute to improved reporting quality of financial statements of quoted deposit money banks in Nigeria. This underscores the importance of human capital development in enhancing financial performance. Staff Retirement Benefit (RB). Staff Retirement Benefits have a statistically significant positive effect on Discretionary Accruals. This indicates that providing comprehensive retirement benefits can positively impact firm valuation, potentially by improving employee retention and satisfaction. Executives’ Earnings (EE). Executives’ Earnings have a statistically significant positive effect on Discretionary Accruals. This suggests that higher earnings for executives are associated with higher reporting quality of financial statements of quoted deposit money banks, possibly due to aligning executive interests with shareholder value

11. Recommendations Based on the study's findings, the following recommendations are proposed: i . Management of banks should continue to invest in competitive personnel cost packages, as these are associated with higher quality of financial statements. However, this will ensure that such investments are aligned with productivity improvements and overall strategic objectives to avoid potential inefficiencies. ii. Management should allocate resources towards comprehensive personnel training programs to enhance employee skills and performance. This investment can yield significant returns in terms of firm valuation and should be strategically integrated into broader human capital development plans. iii. Management should maintain and enhance retirement benefits to boost employee loyalty and reduce turnover. They will ensure that retirement benefit schemes are designed to align with each employee needs and the firm’s financial sustainability.

12. THANK YOU SIR