Moderating effect of Working capital on the relationship between Board Characteristics and Financial Performance of Listed Firms in Nigeria

Abstract

The study investigates the moderating effect of working (cash conversion cycle) on the relationship
between board characteristics and financial performance of listed firms in Nigeria that are
registered with Nigerian Exchange Group market. While firm performance proxied by return on
asset (ROA) is the dependent variable, the independent variables adopted for this study includes
board ownership, board independence and working capital (cash conversion cycle). The population
of the study is 156 firms registered with NGX and sample size of 30 firms was arrived at based on
the availability of data for ten years for all the research variables was purposively selected. The
econometric techniques adopted in this study are the panel fixed and Random effect regression
techniques. The empirical result of this study leads to the conclusion that without moderating with
working capital, board independence significantly increases firm financial performance. However,
after moderating with working capital, the result shows that it also significantly improved firm
financial performance. Succinctly, the study recommends that to improve performance,
management should cautiously consider increasing the number of independent non-executive on
the board while also increasing working capital