EFFECT OF BOARD COMPOSITION AND FIRM CHARACTERISTICS ON THE FINANCIAL REPORTING QUALITY OF LISTED CONSUMER GOODS FIRM IN NIGERIA

Amaka Glory Akaolisa and Nuraddeen Usman Miko
Volume 10 Issue 1

Abstract

The present research investigates the effect of board composition and firm characteristics on the financial reporting quality among consumer goods firms that are publicly listed in Nigeria. The research employs collected data from annual reports and accounts that have been archived. The study sample comprises 20 firms, from which 17 firms were selected for the period spanning from 2013 to 2021. The research utilised Panel data and subsequently utilised Fixed Effect (FE), Random Effect (RE), and Hausman techniques for data analysis. The research findings indicate that the financial reporting quality of consumer goods firms listed in Nigeria is significantly influenced by board size, leverage, and return on asset. However, the study found no significant impact of board independence on financial reporting quality. The researcher's recommendation is that companies should comply with the Nigerian code of corporate governance, which stipulates that the board size should consist of an adequate number of members possessing a suitable blend of knowledge, skills, and experience necessary for effective governance of the organisation, based on the findings presented. It is advisable that the Financial Reporting Council of Nigeria and other regulatory entities enhance their control and monitoring mechanisms to ensure that corporations comply with the codes of corporate governance. The findings indicate that consumer goods companies with elevated profit margins exhibit a proclivity towards engaging in earnings management practises as a means of attaining their targeted profit levels, thereby safeguarding investor confidence in the organisation. In order to mitigate the occurrence of opportunistic behaviour in consumer goods management, the researcher suggests that shareholders should prioritise the implementation of effective monitoring and supervisory controls. Additionally, it is recommended that companies engage the services of larger audit firms to conduct thorough audits, thereby ensuring the production of high-quality financial reports. Keywords: Board, Firm, Financial Reporting, Consumer Goods

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