IMPACT OF CORPORATE BOARD DIVERSITY ON THE FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study investigates the impact of board diversity on the financial performance of listed
Deposit Money Banks (DMBs) in Nigeria. Gender diversity, nationality diversity, ethnicity
diversity and cognitive educational qualification were used as proxies for board diversity and
market based measure. Tobin`s Q was used to measure performance. Data for the study was
extracted from the Nigeria stock exchange fact book and sampled banks’ annual report for the
period 2012- 2018. The study adopted both descriptive and panel data regression techniques.
Fixed effect model was used to assess the effects of the board diversity variables on the financial
performance. The results revealed that gender diversity and cognitive educational qualification
were positively linked to financial performance, while nationality diversity and ethnic diversity
impact negatively on banks’ financial performance over the period of study. The study
recommends among other things, that there should be more representation of female directors on
corporate boards and that hiring of foreign directors should be discouraged by deposit money
banks in Nigeria. Also, since ethnic diversity impacts negatively on banks’ financial
performance, listed deposit money banks in Nigeria should focus on appointing directors with
requisite qualification, skills and competence rather than ethnic consideration.