GENDER AND ETHNIC DIVERSITY ON BOARDS AND FINANCIAL REPORTING QUALITY: EVIDENCE FROM NIGERIA

Abstract

The research aim to investigate the potential influence of gender and ethnic diversity within corporate boards on the quality of financial reporting. The study employed panel data analysis, utilising a sample size of 960 firm-year observations spanning the time frame of 2012 to 2021. The data concerning corporate governance was obtained through manual collection from the annual reports of corporations, which were readily available on the Nigerian Exchange Group platform. In contrast, the financial data was acquired from the Thomson Reuters Eikon database. According to our research findings, firms that have a significant presence of female directors demonstrate a notable influence on the quality of financial reporting, as assessed through the measurement of anomalous accruals. Likewise, organisations that possess boards with greater ethnic diversity exhibit an elevated standard of financial reportig.This study shows that firms within a multicultural setting need to increase their board diversity for more transparent financial reporting. Accordingly, both the agency theory and the upper-echelons perspective lend support for more women and ethnic considerations on board. Our measure for ethnic diversity (language names of directors) might not be well known. We used the directors' tribal names to determine their ethnicity, a concept that hasn't received much attention in the literature up to this point. Our findings imply that in the discussion of board diversity, regulatory authorities may need to take into account additional salient varied societal elements.