Board Diversity and Financial Reporting quality of listed deposit money banks in Nigeria

Purpose: The corporate environment in Nigeria is believed to have experienced cases of earnings manipulations which have brought doubt to the credibility of financial reporting resulting in corporate failure. These have attracted the attention of practitioners, regulators, researchers and other stakeholders in getting possible solutions to poor quality of financial reporting in corporate  businesses. Therefore, the purpose of the study is to investigate the effect of board diversity on financial reporting quality of listed Deposit Money Banks (DMBs) in Nigeria. Methodology: The study uses panel data regression technique for data analysis. Data was obtained from the audited annual reports and accounts of the banks over the period 2006 - 2017. Robustness tests such as normality test of standard error, multicollinearity and heteroscedasticity tests were carried out to validate the results. Findings: The study found that board remuneration, percentage of women board members and audit committee gender have significant positive effect on financial reporting quality implying lower earnings management. Also, board experience and board reputation have negative but weak effect on financial reporting quality. However, board ownership has a positive and significant effect on earnings management but board nationality and board age have positive but insignificant effect on financial reporting quality of banks. The two control variables (financial performance and leverage have significant negative influence in curtailing managers’ opportunistic tendencies. Policy Implications: The findings have important policy implication for the Central Bank of Nigeria (CBN) which is striving to improve transparency and quality of financial reporting in the financial sector. It also have policy implication which enables the CBN and the DMBs to reap the benefit of having a well re-structured, re-composed, re-organized and diversified board along the findings of the study. Originality: The originality of study is in the use of comprehensive lists of board characteristics in the Nigerian banking sector. The study originality is also in the use of the entire population of the listed DMBs giving it a wider coverage and therefore more generalizable.