MODERATING EFFECT OF RISK MANAGEMENT COMMITTEE ON THE RELATIONSHIP BETWEEN BOARD CHARACTERISTICS AND FINANCIAL REPORTING QUALITY

Abstract

This study examined the moderating effect of risk management committee on the relationship between board
characteristics and financial reporting quality among listed non-financial firms in Nigeria. The study employed
ex post facto research design. The population of the study consisted of 116 non-financial companies quoted on
the Nigerian Stock Exchange (NSE) as at 31st December, 2020. The sample size of forty-nine (49) companies
was determined using the Taro Yamane sampling size technique. Data collected for this study were solely from
secondary sources. Data were extracted from the Published Audited Accounts and Financial Statements and the
Annual Reports of the listed non-financial firms in Nigeria. The study adopted the use of multiple regression to
analyse the data. The result of the fixed effect regression as suggested by the Hausman specification test
revealed that risk management committee has significant moderating effect on the relationship between board
gender diversity, board financial expertise, board independence and financial reporting quality among listed
non-financial firms in Nigeria. On the other hand, the study found that risk management committee as a
moderator has no significant moderating effect on the relationship between board size and financial reporting
quality among listed non-financial firms in Nigeria. This is because the presence of board size adds little or no
improvement to financial reporting quality. Hence, from the findings, the study concluded that risk management
committee is indeed a viable governance strategy aimed at improving the financial reporting quality through
the scrutiny of the assessment and disclosure of risks inherent in the company. From the findings and conclusion,
the study recommended that non-financial companies should strengthen their corporate governance system
through establishment of a risk management committee to dissect the vulnerable areas that might threaten the
going concern of the companies.