EFFECT OF BOARD
DIVERSITY ON FINANCIAL
PERFORMANCE OF LISTED FIRMS
IN NIGERIA

EFFECT OF BOARD
DIVERSITY ON FINANCIAL
PERFORMANCE OF LISTED FIRMS
IN NIGERIA
Nwaorgu, Innocent Augustine &
Iormbagah Jacob Aondohemba*
Department of Accounting, College of
Management sciences,
Michael Okpara University of Agriculture
Umudike, Umuahia, Abia State.
*jiormbagah1@gmail.com
ABSTRACT
Global economic crises are blind to gender,
culture, nationality or is a single expertise
exempted from global economic meltdown a
currently witnessed over the world as a result
of the Covid_19 pandemic. The current
Accounting and Finance Research Association
economic crises have led firms to seek loans
thereby increasing their leverage ratio and
exposing the firms to liquidation risk. To avert
a possible liquidation or poor management of
debt owned by the firms, there is a need to
have a management team that is diverse in
nature so to surmount all the requisite board
characteristics necessary for sound financial
performance. This study examines the effect
of board diversity on financial performance of
listed firms in Nigeria. Using Ex-post facto
research design with content analysis
approach to specific variables, the study
employed multiple regression model; in
analyzing data gotten from the financial
statement of 7 firms randomly selected from 7
sectors on the Nigerian stock exchange market
who engage in manufacturing activities from
2014 to 2018. Findings revealed that gender
diversity has a significant effect on leverage
ratio of the listed firms while educational
diversity and nationality diversity both have no
significant effect on leverage ratio of the listed
firms in Nigeria. Thus, it is recommended that
listed firms Nigeria should highly consider the
need to admit more female board members so
as to balance up the ratio of gender diversity.
This will not only give credence to the
contemporary propagation of gender equality
but having more female members who are
resourceful in risk evaluation will serve as a
check to the possibility of bankruptcy when
firms
expose themselves to high leverage ratio.
Also, the listed firms should admit board
members that are resourceful as a result of
educational diversity. This will help the board
have the required human resources to
evaluate the best possible financing option vis
a vis cost of capital and any agency issues that
may arise from such investment decision.
Lastly, the need for board diversity in terms of
nationality of board members is important.
The board members with diverse nationality
are resourceful and vast in international
business culture and economic experiences.
This will help the board members navigateBook of Abstract
the contemporary economic dynamisms as a
result of business globalization which poses a
threat to the survival of businesses on daily
basis.
Keywords: Gender diversity, educational
diversity, nationality diversity and leverage
ratio

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