Board of Directors Characteristics and Financial Reporting Quality of Selected Listed Manufacturing Firms in Nigeria

Abstract

The study examines the influence of board characteristics on the financial reporting quality (FRQ) of selected listed manufacturing firms in Nigeria, addressing a critical area of corporate governance research. Using a quantitative ex-post-facto research design, the study analyses panel data from 20 listed manufacturing firms over 12 years, covering 2010 to 2021.Keyboard characteristics, including board size, independence, financial expertise, and diversity, are evaluated against financial reporting quality, measured using the modified Jones model for discretionary accruals. Diagnostic tests were conducted to ensure the reliability of the results, confirming the absence of multicollinearity (mean VIF = 1.11), heteroscedasticity and the appropriateness of the random-effects model through a Hausman test (p = 0.1534). The findings reveal that board size positively and significantly influences FRQ (r=0.2341), highlighting the role of larger boards in enhancing oversight and governance. Conversely, board independence (r = 0.0126) and board financial expertise ( r = − 0.0273) show no significant relationship with FRQ, challenging the assumption that these characteristics inherently improve financial reporting quality. Board diversity exhibits a weak yet significant positive correlation (r = 0.0877), suggesting that gender diversity contributes to governance but may require complementary mechanisms for greater impact. The study concludes that while some board attributes directly influence FRQ, others require strategic integration into governance practices to achieve meaningful improvements. These findings provide actionable insights for policymakers and corporate leaders seeking to strengthen governance and financial reporting practices in Nigeria.