Diversity and performance: a case of board composition of firms on the Nigerian stock exchange

Okeyide, Olumide (2018) Diversity and performance: a case of board composition of firms on the Nigerian stock exchange. Doctoral thesis, University of East Anglia.

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Abstract

This thesis examines the relationship between crucial board characteristics and firm performance in certain industries in Nigeria. We examine the business case for the inclusion of women and ethnic minority directors on the board. Specifically, we investigate the relationship between the number of women directors and the number of ethnic minority directors (Yoruba, Igbo and Hausa) on the board, important board committees and financial performance measured as Return on Assets and Tobin’s Q.

Unlike most studies on board which focus on developed markets, this study was conducted in an emerging market and the focus was on diversity using a pragmatic approach. Most study of this kind are pure empirical studies. To have a broader perspective on the subject we employed a mixed method approach. Employing a fixed effects model for our panel data and a semi-structured interview through a snowballing approach, we explore diversity and firm performance.

Different theories such as resource dependence theory, agency theory, and stakeholder theory suggest that gender and ethnic diversity may have either a positive, negative, or no effect on the financial performance of the firm. Our statistical analysis supports the aforementioned effects. Our research results are consistent with what Carter et al. (2010) describe as a contingency explanation because the effect of the gender and ethnic diversity of the board may be different under different circumstances at different times.

We found a positive and significant relationship between some ethnic groups and firm performance. However, we do not find a significant relationship between the gender, important board committees, or non-executive female board member and financial performance for a sample 190 firm on the Nigerian Stock Exchange. The results of our analysis do not support the business case for inclusion of women on corporate boards but it also does not deny it. This is linked to how we found that social networking, regionality, social acceptability, double shifting for women and minorities play important roles in determining the effectiveness of women and ethnic minorities on the Nigerian corporate board in our interviews, which may help to explain the limited numbers and the lack of impact of diversity on board performance in this developing country context. The developing country context also theoretically demanded a more integrated use of corporate governance thinking around agency, stewardship and resource dependence to help explain how governance operates in emerging economies like Nigeria.

Item Type: Thesis (Doctoral)
Faculty \ School: Faculty of Social Sciences > Norwich Business School
Depositing User: Gillian Aldus
Date Deposited: 31 May 2019 09:48
Last Modified: 31 May 2019 09:48
URI: https://ueaeprints.uea.ac.uk/id/eprint/71184
DOI:

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