The Impact of Board Independence and Diversity on the Financial Reporting Quality of NGX-Listed Firms

Financial reporting quality (FRQ) remains a persistent concern in emerging economies, particularly in Nigeria, where corporate governance failures have repeatedly undermined investor confidence and market integrity. This study examines the impact of board characteristics, specifically board independence, board size, board gender diversity, board financial expertise, and CEO tenure, on financial reporting quality among 148 listed firms on the Nigerian Exchange Group (NGX) over the period 2010 to 2025. Employing an ex-post facto research design and panel regression analysis with fixed and random effects estimators validated through the Hausman specification test, the study controls for firm size, return on assets (ROA), leverage, Big 4 auditor presence, industry effects, and year effects. Financial reporting quality is proxied through accruals-based earnings management (modified Jones model residuals). Results reveal that board independence and board financial expertise significantly reduce earnings management, thereby enhancing FRQ, while CEO tenure and larger board size are associated with deterioration in reporting quality. Board gender diversity shows a positive but marginally significant association with FRQ, suggesting the need for deeper inclusivity reforms. These findings are robust to alternative specifications and post-estimation checks, including tests for heteroscedasticity, autocorrelation, and cross-sectional dependence. The study contributes to the sparse but growing body of empirical literature on governance and FRQ in sub-Saharan Africa, offering timely policy implications for regulators, the Securities and Exchange Commission of Nigeria (SEC), and institutional investors. The results affirm agency theory predictions and extend stewardship theory arguments in the Nigerian context.