Board Diversity and Financial Performance In Listed Manufacturing Companies In Nigeria.

Abstract

The issue that is germane in this study is whether boards with higher levels of female directors can assist management in fulfilling its stewardship obligation better than boards with lower levels of female inclusion. Hence, this study explored the effect of board diversity on financial performance of listed manufacturing companies in Nigeria. The study adopted ex-post facto research design. The population of the study comprised 21 quoted companies in consumer goods sector on the Nigerian Stock Exchange (NSE) as of December 31, 2019. A sample of 6 quoted companies that had complete and relevant data for the period of study (2010-2020) was selected through purposive sampling techniques. Data were extracted from published audited annual reports and accounts of the selected companies. Data were analyzed using descriptive and inferential (multiple regression) statistics. The hypotheses were tested at 0.05 significance level. The findings revealed that board diversity (BD) had positive and significant effect on financial performance of listed manufacturing companies in Nigeria (FD = 18.696, t-test = 4.058, p < 0.05). This implies that female director on the board is a significant factor influencing changes in ROA. Firm size has a negative significant control on the effect of BD on financial performance (FS = -0.435, t-test= -2.657, p < 0.05). By implication, the bigger the size of the company the lower the ROA. The study concluded that board diversity promotes financial performance. It was recommended that the shareholders of companies should appoint more female directors on board as it enhances financial performance.