RISK COMMITTEE DEMOGRAPHIC TRAITS: A STUDY OF THE IMPACT OF EXPERTISE ON RISK DISCLOSURE QUALITY OF LISTED INSURANCE FIRMS IN NIGERIA

Abstract

The study explored the effect of risk committee expertise on the risk disclosure quality (RDQ) of listed insurance firms in Nigeria from 2011-2021. Data was obtained from the financial statement and annual reports of seventeen listed insurance firms sampled out of a population of twenty-one firms. The dependent variable employed in the study was RDQ defined by the quantity of risk disclosure sentences while risk committee expertise was employed as the independent variable of the study. The ratio of the number of Directors with expertise in Accounting, Finance, and Risk Management in the committee to the total number of Directors in the committee serves as a proxy for the independent variable. Descriptive statistics, correlation analysis, and GLS regression were used to analyse the data collected. To ascertain the suitability of the data for regression analysis and the robustness of the regression results, post estimation and pre-estimation tests were performed. The result of GLS regression conducted indicated that Risk Committee expertise has a significant positive impact on RDQ. Consequently, the current study recommends that in order to improve the quality of risk disclosure in listed insurance firms, the financial reporting council of Nigeria (FRCN) and other regulatory authorities, such as the national insurance commission (NAICOM), should mandate the establishment of risk committees composed of members experienced and knowledgeable in finance, accounting, risk management, and disclosure in their corporate governance codes. This result has practical implications as it underscores the fact that the knowledge and skill of the risk committee drives improved risk disclosure. In addition, the result further influences the efforts of regulatory authorities in their attempt to develop resilient corporate governance codes that guarantees qualitative risk disclosure.