Board characteristics and firm’s financial performance in Nigeria

Abstract

The fallout from the financial crisis has placed a heavier focus on best practices for corporate governance principles. Boards of directors feel more  pressure than ever before to be transparent and accountable. The study examined the effect of board size and its independence on the performance of  listed entities in Nigeria. It further determined the effect of board diligence and board diversity on the performance of quoted firms in Nigeria. These  were with the view of examining the relationship that exists between board characteristics and performance of quoted firms in Nigeria. The study which  covered a ten-year period (2009–2018) made use of secondary data sourced from published annual reports and accounts of 35 purposively selected listed  companies on the Nigerian Stock Exchange (NSE). The Pooled Ordinary Least Square (OLS) and generalized least square method of regression  techniques were employed in analyzing the data obtained. Findings from the study revealed that a significant negative relationship exists between  earnings per share and board size with a coefficient of -0.33 and p-value of 0.0095 (>0.01) and between earnings per share and board diligence with  coefficients of -0.43 and 0.48 and p-value of 0.02 (>0.05) and 0.0095 (>0.01) respectively, but no significant relationship exists between earnings per share  and board independence with coefficients of -2.67 and –1.64 and p-value of 0.0218 and 0.49 respectively and between earnings per share and board  gender diversity with coefficients of 0.06 and 0.08 and p-value of 0.42 and 0.36 respectively. The study concluded that board size and board diligence   have impact on the performance of quoted companies in Nigeria, while board independence and gender diversity do not have effect on the performance  of quoted firms in Nigeria. It was recommended small board size of diverse educational background and wide experiences of members,  and regular meetings to discuss matters that concern the performance of firms.