BOARD CHARACTERISTICS AND FINANCIAL PERFORMANCE OF NONFINANCIAL FIRMS IN NIGERIA: A PANEL DATA INVESTIGATION

Abstract

This study investigates the relationship between board characteristics and the financial performance of nonfinancial firms listed on the Nigerian Exchange Group between 2013 and 2023. Using a panel data design, secondary data were extracted from 111 listed firms’ annual reports, with 76 meeting the inclusion criteria. The study examines how board independence, board size, gender diversity, and board meeting frequency affect firm performance, measured by return on assets (ROA), earnings per share (EPS), and market capitalization (MKCP). Employing fixed and random effects regression models, the findings reveal that board size has a significant negative effect on ROA, suggesting that excessively large boards may hinder performance. Conversely, gender diversity exhibits a positive but insignificant relationship with financial performance, indicating the potential value of inclusivity in corporate governance. Board independence and meeting frequency show no significant effects on firm performance, reflecting structural and contextual limitations within Nigerian corporate governance practices. Control variables such as firm size and leverage significantly influence firm performance, whereas firm age does not. The study concludes that board structure remains a critical determinant of firm outcomes in developing economies, emphasizing the need for tailored governance frameworks that reflect Nigeria’s institutional realities. Policymakers and regulators are urged to strengthen board composition standards to enhance accountability and optimize corporate value creation.