Board Composition and Financial Statement Fraud

Abstract

In this study, attempt was made to understand the financial scandals involving accounting irregularities in leading companies. The broad objective of this study is to investigate the relationship between board composition and financial statement fraud. The study utilized a sample of seventy five (75) firms from the universe of companies quoted on the Nigerian Stock Exchange. The data was a combined property of time series and cross-sectional covering the period, 2009 to 2016, with six hundred (600) firm-year observations. The study utilises descriptive statistics, correlation analysis, pooled binary logistic regression and analysis and panel binary logistic regression analysis with the aid of Statistical Package for Social Sciences (SPSS) and E-view 9.0. The result of the study reveals that board composition has the likelihood to increase financial statement fraud. The relationship between female gender composition and financial statement fraud was positive though statistically insignificant at the 5% level, it shows that the presence of female board members is not likely to reduce financial statement frauds of the sampled companies. Among others, we recommend the inclusion of more external independent directors on the board. We also advocated for female gender representation on the corporate board.