Moderating Effect of Firm Size on Board Structure and Financial Performance of Quoted Financial Services Firms in Nigeria

Abstract

The effectiveness and efficiency of the board of directors as a monitoring tool to the management of an organization is essential to the performance of the firms. It is on this note that this study examines the moderating effect of firm size on board structure and financial performance of quoted financial services firms in Nigeria, from 2019 to 2023. The population comprises all the quoted financial services firms in Nigeria while the filtering technique was used to arrive at a sample size of forty-five (45) financial service firms in Nigeria. The hypotheses were tested using a robust random effect regression model after conducting some diagnostics tests. The results of the first model show board independence has an insignificant positive effect on the return on assets of quoted financial services firms in Nigeria. Also, board size has a significant negative effect on the return on assets of quoted financial services firms in Nigeria. Further results based on the second model indicate that firm size significantly moderates the relationship between board size, and board independence, with the interaction of firm size having a significant statistical effect on the return on assets of quoted financial service firms in Nigeria. The study recommends among others, that the financial services firms should constitute a small board size that is drawn from those who are well experienced and knowledgeable in the industry to bring their expertise to bear and enhance the financial performance of the financial services firms in Nigeria.