Board Characteristics and Financial Reporting Quality of Listed Insurance Companies in Nigeria: Moderating Role of Profitability

Abstract

This study investigates the effect of board characteristics on the financial reporting quality of listed insurance companies in Nigeria, with profitability serving as a moderating variable. The research adopts board independence, board diligence, and board gender diversity as proxies for board characteristics, while financial reporting quality is measured using Modified Jones Accruals Quality. Firm profitability, coded as 1 for loss-making firms and 0 otherwise, is tested for its moderating effect on the relationship between board characteristics and financial reporting quality. Control variables such as firm size and leverage were also incorporated into the models. Data extracted from a sample of 17 listed insurance companies was analyzed using Ordinary Lease Square regression techniques for a period of ten years (2013-2022). The results indicate that board diligence improves financial reporting quality, while board independence and gender diversity exhibit no significant effects. Notably, the interaction between gender diversity and profitability is significant; suggesting that gender-diverse boards may have a stronger impact on financial reporting in loss-making firms. Based on the results, the study recommends that companies should enhance board diligence through regular meetings, invest in training independent directors, and continue promoting gender diversity with support mechanisms, while regulatory bodies should encourage profitable firms to have more female representatives on the board, thereby improving financial reporting quality.