Authors: Okpala, Blessing Ginikachukwu, Okezie, Stella Ogechukwu & Onyekachi, Silvia Nwakaego
Abstract
The agency theory presupposes that the monitoring and supervisory roles of the board of directors, necessitated by the separation of ownership and control that characterize modern corporations, will promote the maximization of shareholders’ wealth. Thus, this study aims to analyze the effect of corporate board attributes on the financial performance of listed commercial banks in Nigeria from 2013 – 2022. The study utilized three attributes of the board: board size, independence, and gender diversity, and two proxies of financial performance: returns on assets and earnings per share. Data is obtained from the financial statements of the thirteen listed commercial banks that formed the population of this study. A panel generalized method of moments was adopted to analyze the hypotheses formulated in the study, and the findings show that board size and independence have significant and negative effects on returns on assets. In contrast, gender diversity has no significant influence on returns on assets. The findings also indicated that board size has significant and negative effects on earnings per share, whereas independence and gender diversity have no significant influence on earnings per share. The study, therefore, concludes that corporate board attributes are essential to organizational success and that gender diversity is yet to be optimally exploited in Nigeria's banking sector. Based on the conclusion, it is recommended that emphasis should be placed on the size of the board members and external directors to improve board performance to increase financial results instead of decrease. The study argued for an increased number of female directors to balance perspectives and approaches to decision-making. It was also suggested board independence should be upheld by engaging more outside and qualified board members.
Keywords: Board Size, Board Diversity, Board Independence, Financial Performance