Moderating Effect of Risk Management Committee on the Relationship Between Corporate Governance Mechanisms and Financial Reporting Quality of Listed Non-Financial Firms in Nigeria

Abstract

This study examined the moderating effect of risk management committee on the relationship 
between corporate governance mechanisms and financial reporting quality among listed non
financial firms in Nigeria. Audit committee characteristics were explained using audit committee 
gender diversity, audit committee financial expertise, audit committee size and audit committee 
independence. The study employed ex post facto research design. The population of the study 
consisted of 116 non-financial companies quoted on the Nigerian Exchange Group (NXG) as at 
31st December, 2022. The sample size of forty-nine (49) companies was determined using the Taro 
Yamane sampling size technique. Data collected for this study were solely from secondary sources. 
Data were extracted from the Published Audited Accounts and the Annual Reports of the listed 
non-financial firms in Nigeria. The study adopted the use of multiple regression to analyse the 
data. The result of the fixed effect regression as suggested by the Hausman specification test 
revealed that risk management committee has significant moderating effect on the relationship 
between audit committee financial expertise, audit committee size, audit committee independence 
and financial reporting quality among listed non-financial firms in Nigeria. On the other hand, the 
study found that risk management committee as a moderator has no significant moderating effect 
on the relationship between audit committee gender diversity and financial reporting quality among listed non-financial firms in Nigeria. This is because the presence of audit committee gender 
diversity adds little or no improvement to financial reporting quality. Hence, from the findings, the 
study concluded that risk management committee is indeed a viable governance strategy aimed at 
improving the financial reporting quality through the scrutiny of the assessment and disclosure of 
risks inherent in the company. From the findings and conclusion, the study recommended that non
financial companies should strengthen their corporate governance system through establishment 
of a risk management committee to dissect the vulnerable areas that might threaten the going 
concern of the companies.