EFFECTS OF BOARD CHARACTERISTICS ON FINANCIAL REPORTING QUALITY OF NIGERIA LISTED COMMERCIAL BANKS: A SYSTEM GMM APPROACH

This study investigates the effects of board characteristics on the financial reporting quality of Nigeria-listed commercial banks, focusing on Board Independence (BOI), Managerial Ownership of Shares (MSO), and Board Composition (BC), with a particular emphasis on the significance of Board Meetings (BM). The study aims to provide insights into how these board characteristics influence the accuracy and reliability of financial reporting in the Nigerian banking sector. Employing a quantitative panel research design, this study utilizes a System Generalized Method of Moments (System GMM) approach to analyze data from eight deposit money banks listed on the Nigerian Stock Exchange. The sample includes all deposit money banks with an international authorization license, observed over a five-year period from 2019 to 2023. A census technique was used to ensure that all relevant elements of the population were included in the study, providing a comprehensive analysis of board characteristics and their effects on financial reporting quality. The study reveals that among the board characteristics examined, only Board Meetings (BM) demonstrates a significant impact on financial reporting quality. The findings indicate that frequent and effective board meetings enhance the quality of financial reporting, while Board Independence (BOI), Managerial Ownership of Shares (MSO), and Board Composition (BC) do not show significant effects in this context. This highlights the critical role of regular and substantive board meetings in ensuring accurate and reliable financial reports. The results underscore the importance of focusing on the frequency and effectiveness of board meetings as a key mechanism for improving financial reporting quality. For policymakers and regulators, the study suggests that enhancing the structure and processes of board meetings could be a more effective approach to fostering high-quality financial reporting. For banking institutions, the findings advocate for the implementation of practices that promote regular and meaningful board discussions to address financial reporting challenges. This research contributes to the literature by providing a nuanced understanding of how specific board characteristics influence financial reporting quality in the Nigerian banking sector. The use of the System GMM approach offers a robust analytical framework for examining these relationships, and the focus on Board Meetings as a significant factor introduces a new perspective on improving financial reporting practices. The study’s findings offer valuable insights for both academic researchers and practitioners seeking to enhance governance mechanisms in the financial sector.