Board Characteristics and Market Value Added of Listed Service Firms in Nigeria

Abstract

This study examined the relationship between board characteristics and market value added of listed service firms in Nigeria for a fourteen year period covering from 2008-2021. Board size, board gender diversity and board independence were used to proxy board characteristics, while market value added served as the dependent variable. In line with the objectives of the study, three hypotheses were formulated.  Ex-Post facto research design was employed.  Twelve (12) listed service firms constituted the sample size of this study. Secondary data were extracted from the annual reports and accounts of the sampled firms and were analysed using E-Views 10.0 statistical software. The study employed descriptive statistics and inferential statistics using Pearson correlation and Panel Least Square (PLS) regression analysis. Findings from the empirical analysis showed that there is a significant and positive relationship between board size and market value added (β₁=0.472095; p-value = 0.0000<0.05); a significant and positive relationship between board gender diversity and market value added (β₂=0.854378; p-value = 0.0009<0.05); a significant and positive relationship between board independence and market value added (β₃=0.331410; p-value = 0.0000<0.05) of listed service firms in Nigeria at 5% level of significance respectively. Conclusively, board characteristics significantly relate with and market value added of quoted service firms in Nigeria. It was recommended inter alia that considering the positive effect of board characteristics on market value added, it is suggested that company boards should have an independent majority which is more likely to consider the best interests of shareowners first, also is likely to foster independent decision-making and to mitigate conflicts of interest that may arise.