Board Characteristics and Corporate Financial Distress: Firms in Nigeria

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Authors: AMEDE Otivbo Faith & EFOSA Ehima

Abstract

The study examined the impact of board characteristics on corporate financial distress in Nigeria. The study adopted the ex-post facto research and sampled forty-four (44) financial companies listed on the Nigerian Exchange Group. The secondary data were hand-extracted from the audited annual reports and accounts of the sampled companies for a nine-year period of 2011-2019. Three major analyses pattern were employed: the univariate, bivariate and multivariate analysis. They include the descriptive statistic, correlation matrix, and binary panel regression. The results of the analyses showed that board size and corporate governance disclosure quality have significant positive and negative relationships with corporate financial distress respectively, while board audit committee presence and board independence were not statistically significant. The result equally showed that control variable of firm leverage did not significantly influence financial distress while leverage was non-significant. The comparative analyses revealed that the sampled financially healthy companies have significantly higher board audit committee presence, higher proportion of non-executive directors and high corporate governance disclosure compliance, in comparison with the sampled distressed firms. The study concludes that compliance with corporate governance principles reduces the likelihood of financial distress. It therefore recommends, among others, that foreign direct investment at the organisational level should be encouraged by both the regulatory bodies and organisations, together with greater compliance with corporate governance principles in order to foster higher organisational performance.

Keywords: Financial distress, Board Characteristics, Corporate governance.

2025 - NIJAF - 17 - 110 AMEDE ET AL..pdf

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