The Effect of Managerial Shareholding on the Likelihood of Financial Distress of Listed Deposit Money Banks in Nigeria: The Role of Loan Loss Provisions

This study investigates the effect of managerial shareholding on the likelihood of financial distress among listed deposit money banks in Nigeria, with particular attention to the moderating role of loan loss provisions (LLPs).Using panel data from 14 banks between 2015 and 2024, the analysis employs Ordinary Least Squares (OLS) regression after confirming model suitability through Hausman and Lagrangian Multiplier tests. Financial distress is measured using the Altman Z-score, while managerial shareholding and LLPs are derived from audited financial statements. Results reveal that managerial shareholding significantly increases the likelihood of distress, suggesting that higher insider ownership undermines financial stability. LLPs also exert a significant effect and moderate the relationship between managerial shareholding and distress. These findings support agency and stakeholder theories, underscoring the importance of governance and provisioning practices in strengthening bank resilience. The study recommends enhanced regulatory oversight and improved governance frameworks.

Managerial Shareholding, Financial Distress, Loan Loss Provisions, Nigerian Banks

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