Corporate Governance, Firm Characteristics, and Financial Reporting Quality: A Nigerian Conceptual Perspective

Jul 31
1 min read

Authors: Babayo Jamilu, Bensley Benedict Fwah, Mohammed Mahmud Kakanda, and Salihu Aliyu Modibbo

Abstract

The quality of financial reporting remains a critical concern for investors, regulators, and other stakeholders because it influences corporate transparency, accountability, and informed decision-making. Although previous studies have extensively examined the direct effects of corporate governance and firm characteristics on financial reporting quality, limited attention has been given to the interaction among these constructs, particularly within the Nigerian financial services companies. This study provides a conceptual perspective on the relationship among corporate governance, firm characteristics, and financial reporting quality of listed financial service firms in Nigeria. The study adopted a conceptual research design based on a comprehensive review and synthesis of relevant literature. A narrative content analysis approach was employed to integrate conceptual, theoretical, and empirical evidence on the subject. The review revealed that firm characteristics, including firm size, profitability, leverage, and liquidity, significantly influence financial reporting quality, while effective corporate governance mechanisms such as board independence, board financial expertise, and audit committee effectiveness enhance transparency, accountability, and the credibility of financial reports. The study further argues that corporate governance serves not only as a direct determinant of financial reporting quality but also as a mechanism that moderates the influence of firm characteristics on reporting outcomes. The study concludes that strengthening corporate governance practices is essential for improving the quality of financial reporting and sustaining stakeholder confidence in Nigeria's financial services sector. It recommends stronger enforcement of corporate governance regulations, continuous capacity building for boards and audit committees, and further empirical studies to validate the proposed conceptual relationships.

Keywords: Corporate governance, firm characteristics, financial reporting quality