Moderating Effect of Agency Cost on Board Diversity and Financial Performance of Listed Non-Financial Firms in Nigeria

The Nigerian business environment has witnessed significant changes in recent years, and understanding the diversity of internal governance mechanism is crucial for sustaining and enhancing financial performance. This study examines the moderating effect of agency cost on the relationship between board diversity and financial performance of listed non-financial services firms in Nigeria. The study employed ex-post facto research design, utilizing data from the audited accounts and reports of sampled listed non -financial firms in Nigeria for ten (10) years spanning (2015-2024). the study employed Driskoll Kraay Panel Corrected Standard Error (DK-PCSE) as the estimation technique for the study. The findings from the direct relationships revealed that board independence, board remuneration, and operating expenses ratio had significant impact on financial performance of the listed non-financial services firms in Nigeria while only board size has insignificant impact on financial performance of the listed firms in Nigeria. From the indirect moderation analysis, the results showed that operating expenses ratio has significant moderation effects on the relationships between board size, board independence and financial performance of listed non-financial services firms in Nigeria during the period of the study. Therefore, it is up to the board of directors of the listed non-financial services firms in Nigeria to set up monitoring, evaluation and compliance committee designed at reducing the level of information asymmetry by the management of the listed firms in Nigeria. This can be achieved by ensuring that the nomination of independent directors into the boards of the listed firms in Nigeria is strictly commensurate with the operating expenses ratio of the listed firms in order to maintain and improve the financial performance of the listed non-financial services firms in Nigeria.