Could the Board of Directors save Publicly Traded Companies from Bankruptcy?

Corporate bankruptcy remains a critical concern for publicly traded companies, with severe consequences for shareholders, creditors, and the broader economy. This study examines the role of the board of directors in mitigating bankruptcy risks through effective governance mechanisms. Using a panel dataset of 152 publicly traded firms in Nigeria over ten years (2014-2023), the study employs a random effects model (REM) regression to assess the impact of board characteristics—such as board size, independence, and gender diversity—on financial distress indicators. The findings reveal that a well-structured board with a higher proportion of independent directors and female members significantly reduces the likelihood of bankruptcy. Additionally, firms with gender-diverse boards exhibit better risk management practices, enhancing corporate resilience. These results underscore the importance of strong governance structures in safeguarding firms from financial distress. The study offers practical insights for regulators, policymakers, and corporate leaders on enhancing board effectiveness to improve corporate survival rates. Future research could explore the influence of external economic factors on board decision-making in crises.