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Journal of Finance and Accounting. 2021, 9(1), 11-31
DOI: 10.12691/jfa-9-1-2
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Board Diversity and Earnings Quality of Listed Deposit Money Banks in Nigeria

ONUOHA Ositadimma Jim1, , OKPANACHI Joshua1, JIM-SULEIMAN Saratu1 and AGBI Samuel Eniola1

1Accounting Department, Faculty of Management Sciences, Nigerian Defence Academy, Kaduna, Nigeria

Pub. Date: April 14, 2021

Cite this paper:
ONUOHA Ositadimma Jim, OKPANACHI Joshua, JIM-SULEIMAN Saratu and AGBI Samuel Eniola. Board Diversity and Earnings Quality of Listed Deposit Money Banks in Nigeria. Journal of Finance and Accounting. 2021; 9(1):11-31. doi: 10.12691/jfa-9-1-2


Instability due to frequent threats of financial distress has been a major problem facing deposit money banks (DMBs) in Nigeria. Efforts by the Nigerian government in the past to address this problem seem to have yielded little results as recent developments of instability in the banking industry indicate. In making such efforts, not much attention has been directed to the area of deceptive earnings reporting, and how board diversity can help checkmate such practices to enhance the quality of earnings reports which is essential in detecting in time financial distress warnings and identifying the necessary steps required to arrest the distress. In view of this, the study investigated the issue of board diversity as it affects the earnings quality of 13 out of 14 listed deposit money banks in Nigeria. The board diversity variables studied include board independence, block-shareholding, gender, age, expertise in accounting and finance, and board diversity combined index (representing the joint effect of the board diversity attributes on earnings quality). Earnings quality was measured from the accruals quality perspective using loan loss provision accruals quality. The study adopted fixed effect regression, employing two models to achieve the research objectives. It was found that Board Diversity Index had negative and significant effect on the discretionary loan loss provision of listed deposit money banks in Nigeria. Hence, the study concluded that the joint effect of the board diversity attributes improves the earnings quality of listed deposit money banks in Nigeria. The study recommended that the regulatory authority for the DMBs should ensure that appointment of board members aligns with corporate governance code demands on board diversity best practices, as this holds the potential of optimizing the joint effect of the board diversity attributes on earnings quality in a typical unitary board system setting as obtains in Nigeria.

board diversity statutory diversity demographic diversity combined effect earnings management earnings quality

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