EFFECT OF BOARD SKILL DIVERSITY ON FINANCIAL PERFORMANCE OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA
John Abuh Oyidih , S.A.S Aruwa, PhD and Mohammed Akaro Mainoma, PhD
Volume 3 Issue 3
Abstract
The monitoring role of the board of directors is a critical corporate governance control mechanism, especially in countries like Nigeria where external control mechanisms are less well developed. The skills set of the board affects the quality of this monitoring role and hence the financial performance of the firm. This study examines the effect of board skill diversity on financial performance of quoted deposit money banks in Nigeria. The population comprises of all the quoted deposit money banks in Nigeria while thirteen (13) quoted deposit money banks were sampled based on their being listed on the Nigerian Exchange Limited (NGX) all through the study period of 2010 to 2022. The data were analyzed using Shapiro-Wilk Normality, Pearson correlation, Heteroskedasticity Breusch-Pagan Test, Hausman specification test and Breusch-Pagan Lagrangian Multiplier Test while hypotheses were tested using robust random effect regression model. The results show that board skill diversity has a significant positive effect on financial performance (proxied by return on assets) of quoted deposit money banks in Nigeria for the period under review. The study recommends that deposit money banks in Nigeria should constitute their boards with directors with diverse backgrounds, experiences and expertise to enhance their board skill as this will lead to better decision-making, improved strategic planning, risk management and overall financial performance of their organizations. Keywords: Skills Diversity, Return on Assets, Listed Deposit Money Banks, Financial Performance
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