Corporate governance practices and firm performance: The moderating effect of female directors

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Abstract

Improved corporate governance practices of banks are viewed as a key mechanism for better performance of banks. Despite the numerous diversification efforts of the Nigerian bank regulators, bank performance remains poor. The study determines the moderating effects of female boards of directors on the relationship between board characteristics and the performance of banks in Nigeria. The quantitative explanatory design utilised a cross-sectional survey sample of 121 respondents from 24 state- and privately-owned banks. Regression analyses were used to examine the effects among the variables. The results showed that board size and board committees (audit, remuneration, and nomination) are positively and significantly related to bank performance. On the contrary, board independence is negatively and significantly related to bank performance. The result revealed that female representation does not have a moderating effect on the relationship between each board size, board independence, and bank performance. Female representation negatively and significantly moderated the relationship between each audit and remuneration committee and bank performance. However, female representation positively and significantly moderated the relationship between nomination committees and bank performance. Our findings shed light on the role of the mandatory policy of including women on banks’ boards and the female board members’ moderating role between the nomination, audit and remuneration committees on one hand and the bank performance on the other.

Keywords: New Corporate Governance Practices, Developing Economy, Female Directors, Bank Performance

Authors’ individual contribution: Conceptualization — V.O.D.; Methodology — V.O.D. and J.K.T.; Formal Analysis — V.O.D.; Investigation — V.O.D.; Writing — Original Draft — V.O.D.; Writing — Review & Editing — V.O.D. and J.K.T.; Supervision — J.K.T.; Project Administration — J.K.T.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G21, G34, L25, O55, P17

Received: 18.06.2022
Accepted: 13.03.2023
Published online: 17.03.2023

How to cite this paper: Dike, V. O., & Tuffour, J. K. (2023). Corporate governance practices and firm performance: The moderating effect of female directors. Corporate Governance and Sustainability Review, 7(1), 8–20. https://doi.org/10.22495/cgsrv7i1p1