Board Characteristics and the Value of Quoted Manufacturing Firms in Nigeria

Abstract

This study examined the effect of board size on the value of quoted manufacturing firms in Nigeria. The purpose is to examine the relationship between board size and value. Panel data was sourced from financial statement of the quoted firms from 2011 to 2020. Market value and equity value were modeled as a function of board size, board composition, board independence and board gender diversity. Panel data Ordinary least square method was used as data analysis technique. The study found that 53 percent variation in market value of the quoted firms can be explained by variation in the board characteristics. The results indicated that board independence and board composition have positive but no significant effect on the market value of the quoted manufacturing firms while the results indicates that board size and board gender diversity have negative and no significant effect on market value of quoted manufacturing firms in Nigeria. 31 percent variation in equity value of the quoted firms can be explained by variation in the board characteristics. The results indicate that board independence and board composition have positive but no significant effect on the equity value of the quoted manufacturing firms while the results indicates that board size and board gender diversity have negative and no significant effect on equity value of quoted manufacturing firms in Nigeria. From the findings, the study concludes that board characteristics have greater impact on market value than equity value. It recommends that board diversity components of Nigeria food and beverage firms which include gender diversity, board size, board independence, and board-director duality need to be strengthened to positively affect value of the firms and the need for managers to ensure that the size of the board is also congruent to organizational needs, such that the board size, competencies, skills and ability advance organizational quest for increase value of the firms