Board characteristics and corporate risk disclosures among listed firms in Nigeria

Abstract

Purpose: The study examined the effect of board characteristics on corporate risk disclosure (CRDI) among listed consumer goods firms in Nigeria from 2014 to 2023. Drawing on agency and legitimacy theories, the research investigates how board size, board independence, board nationality, and risk committee size influence risk disclosure practices.

Methodology: The study adopts an ex post facto research design and utilizes secondary data from 18 purposively selected listed firms. Corporate risk disclosures were measured using a 21-item checklist, and panel regression analysis with the Generalized Least Squares (GLS) technique was employed to address potential econometric issues. Control variables included audit firm size and firm age.

Results and Conclusion: Results indicate that board size and board nationality have no significant effect on CRDI, while board independence exhibits a negative and statistically significant impact. In contrast, risk committee size has a positive and significant relationship with corporate risk disclosure. Audit firm size and firm age also significantly influence disclosure levels. The study concludes that specialized governance structures, particularly effective risk committees, are key drivers of enhanced risk transparency, whereas the mere presence of larger boards or foreign directors does not guarantee improved disclosure.

Implication of Findings: These findings imply that firms should prioritize board effectiveness over numerical size, enhance the integration and engagement of independent and foreign directors, and strengthen risk committees through appropriate resourcing and expertise. The study contributes to the literature on corporate governance and transparency by providing context-specific insights for regulators, corporate boards, and policymakers in emerging economies.