Board Committees’ Independence and Financial Performance of Listed Non-Finance Firms in Nigeria

Abstract

This study examined the relationship between board committees’ independence and financial performance of listed non-finance firms in Nigeria. The specific objectives were to determine the relationship between audit committee’s independence and financial performance of listed non-finance firms in Nigeria; evaluate the relationship between risk management committee’s independence and financial performance of listed non-finance firms in Nigeria; ascertain the relationship between remuneration committee’s independence and financial performance of listed non-finance firms in Nigeria. Ex-post facto research design was adopted and the population of the study consists of all the listed non-finance firms. As of December, 2021, we had 108 non-finance firms listed on the floor of the Nigerian Exchange Group. The final sample size consists of 10 non-finance firms that were arrived at based on the availability of data for ten years for all the research variables. Findings revealed that audit committee independence significantly influence the performance of non-finance companies in Nigeria; Risk committee independence significantly influence the performance of non-finance companies in Nigeria and remuneration committee independence negatively influence the performance of non-finance companies in Nigeria. Specifically, the study concluded that only the variable of remuneration committee independence has negative but insignificant effect on firm financial performance. Furthermore, the study concluded that and increase in audit committee independence and risk management committee independence significantly increase the financial performance of listed non-finance firms in Nigeria. Based on the findings of this study, the researcher recommended that corporate boards of non-finance firms should maintain a sizeable audit committee that are dominated by non-executive directors and shareholders so as to maintain their independence as this significantly influence the firm financial performance.