Effect of Board Attributes and Earnings Management of Listed Consumer Goods Companies in Nigeria

Abstract This study investigates the effect of board attributes on earnings management within the unique institutional context of Nigeria’s listed consumer goods sector. Grounded in Agency Theory, the research examines how four key board characteristics Board Size, Board Independence, Gender Diversity, and Financial Expertise influence the level of discretionary accruals, which serve as the primary proxy for earnings management. Utilizing an ex-post facto research design, secondary data were collected from the annual reports of 15 listed consumer goods firms over a ten-year period (20132022), resulting in 150 firm-year observations. A census sampling method was employed due to the manageable population size, and the data were analyzed using a Random Effects panel regression model, following diagnostic tests that confirmed homoscedasticity and the appropriateness of the random effects estimator. The findings reveal a complex and counterintuitive governance landscape. Contrary to conventional agency theory predictions, Board Independence and Board Financial Expertise exhibit significant positive relationships with earnings management, Conversely, Gender Diversity demonstrates a strong, significant negative relationship, Board Size was found to have no statistically significant effect. The study concludes that the efficacy of corporate governance mechanisms is highly context dependent. In Nigeria’s emerging market environment, demographic attributes like gender diversity prove more effective in safeguarding financial reporting integrity than traditional structural metrics like independence and financial expertise, which may be subject to tokenistic compliance or misaligned incentives. It recommends that regulators and firms move beyond box-ticking compliance to foster substantive board quality and diversity, and it calls for further qualitative inquiry into the boardroom dynamics that underlie these quantitative relationships