THE RELATIONSHIP BETWEEN GREY DIRECTORSHIP, AGGRESSIVE ACCOUNTING, AND MARKET VALUATION OF COMMERCIAL BANKS IN NIGERIA

Abstract This study examined the relationship between grey directorship, aggressive accounting, and the market valuation of listed Nigerian commercial banks from 2015 to 2024. Using an ex-post facto design, secondary data were obtained from the published financial statements of 13 banks. Market valuation was proxied by the market-to-book equity ratio and market capitalization, while grey directorship was measured by the proportion of grey directors and aggressive accounting by the Beneish M-Score. Panel regression analysis with Panel-Corrected Standard Errors (PCSE) was employed, supported by descriptive statistics, correlation analysis, and multicollinearity tests. The findings indicate that grey directorship has a significant negative effect on both measures of market valuation, suggesting that lower board independence weakens investor confidence and firm value. Aggressive accounting, however, does not exert a significant standalone effect, though its joint influence with grey directorship is statistically significant. Overall, the results highlight the dominant role of board independence in shaping market valuation and underscore the importance of strengthening corporate governance practices in Nigeria’s banking sector.