Hedge Accounting Disclosures and Sustainable Growth of Listed Deposit Money Banks in Nigeria.

Abstract:

The primary problem facing listed deposit money banks in Nigeria is their struggle to achieve sustainable growth in a volatile economic environment. This study investigated the impact of hedge accounting disclosures on the sustainable growth of these banks, focusing on commodity hedge disclosure, interest rate hedge disclosure, and foreign exchange rate disclosure, while controlling for market capitalization. Using an ex post facto research design, the study analyzed secondary data from 11 selected banks over a period of 10 years from 2014 to 2023. The method of data analysis was random effect regression technique. The findings revealed that commodity hedge disclosure (COMD) and interest rate hedge disclosure (INTD) have significant positive effects on the sustainable growth rates of listed deposit money banks in Nigeria. Conversely, foreign exchange rate disclosure (FEXD) has a significant negative effect on sustainable growth, indicating that high levels of foreign exchange risk exposure, when disclosed, may reduce investor confidence and perceived stability. The study concluded that hedge accounting disclosures significantly impact sustainable growth of listed deposit money banks in Nigeria. It recommended the management of listed deposit money banks in Nigeria should enhance commodity and interest rate hedge disclosures to improve the quality of foreign exchange risk communication.