EFFECT OF BOARD DIVERSITY ON RISK DISCLOSURE AMONG LISTED INDUSTRIAL GOODS COMPANIES IN NIGERIA

Abstract

The study examined the effect of board diversity on risk disclosure (RSD) among listed industrial goods
companies in Nigeria. Using panel data from 2014 to 2023, it applied the Generalized Method of Moments
(GMM) to address endogeneity issues. The study employed an ex-post facto research design and employed
the Generalized Method of Moments (GMM) technique for data analysis. The findings indicate that past
disclosure practices significantly influence current RSD, reflecting a path-dependent pattern in corporate
reporting. Additionally, board financial expertise positively impacts RSD, suggesting that directors with
financial acumen enhance transparency. However, board gender diversity has an insignificant effect,
implying that increased female representation alone does not necessarily improve risk disclosure. The
study concludes that board financial expertise influences the RSD, as financially knowledgeable directors
are better equipped to assess and communicate corporate risks. Based on these insights, it recommends
that firms prioritize the recruitment and retention of directors with strong financial expertise to enhance
disclosure quality. Furthermore, regulatory bodies and investor groups should advocate for policies
emphasizing financial competence on corporate boards to strengthen transparency and accountability