Chief Executive Officers Characteristics and Fraud Prevention in Deposit Money Banks in Nigeria

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Authors: ONWUCHEKWA, John Chika and EBIAKI, Gift Igoni

Abstract

This study examines how Chief Executive Officer (CEO) characteristics, namely greater diversity, financial expertise, and years of experience, influence fraud prevention in deposit money banks (DMBs) listed on the Nigerian Exchange Group. The study adopts an ex-post facto design and utilises panel data from 13 Nigerian DMBs. Fraud likelihood was measured using the Beneish M-Score, and the study’s analytical framework is grounded in the Fraud Diamond Theory. Data analysis was performed using Period Seemingly Unrelated Regression (PSUR) to address cross-sectional dependencies. The results indicate that CEO financial expertise and years of experience are negatively and significantly related to fraud prevention, suggesting potential overconfidence or managerial complacency. Conversely, greater diversity exhibited a positive, albeit statistically insignificant, effect on fraud prevention. The findings challenge conventional assumptions that greater expertise and tenure invariably lead to better governance outcomes. Instead, they highlight the need for balanced executive profiles that combine experience with adaptability and ethical vigilance. Banks and regulatory bodies should reassess leadership recruitment and monitoring strategies. Emphasis should be placed not only on technical competence but also on governance ethics, independent oversight, and periodic performance evaluation. This study contributes to the growing literature on behavioural governance by offering empirical insights from a developing economy. It underscores the complex and context-specific nature of CEO influence on internal control effectiveness and financial integrity.

Keywords: Chief executive officer, financial expertise, executive diversity, fraud prevention, Nigerian banks, corporate governance

2025 - NIJAF - 17 - 113 Onwuchekwa and Ebiaki.pdf

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