Gusau Journal of

Accounting and Finance
(GUJAF)

Vol. 2 Issue 4, October, 2021 ISSN: 2756-665X

A Publication of

Department of Accounting and Finance,

Faculty of Management and Social Sciences,

Federal University Gusau, Zamfara State -Nigeria

IMPACT OF BOARD ATTRIBUTES ON EARNINGS QUALITY OF LISTED

INSURANCE COMPANIES IN NIGERIA

Sabo Mohammed

Department of Accounting

Yusuf Maitama Sule University, Kano

Sabomuhammad80@gmail.com, +2348027912454

Ibrahim Magaji Barde

Professor of Accounting

Department of Accounting

Bayero University, Kano

imbarde@yahoo.com, +2348036028453

Abstract

This research examined the impact of board attributes on the earnings quality of Nigerian listed insurance businesses.

The study employed documented data from the annual reports and accounts of the sampled companies from 2009 to

2018. The population of the study is made up of all twenty-seven (27) insurance companies listed on the Nigerian

stock exchange, with fifteen (15) selected as the study sample. Using Stata version 14, the data was analyzed using

descriptive statistics to obtain summary statistics for the variable, Pearson correlation analysis, and the Multiple
Regression approach. It was revealed that the size and independence of the board of directors had a significant impact

on the quality of earnings. Female directors and board meetings, on the other hand, have no significant influence on

the earnings quality of Nigerian listed insurance companies. As a result, the study concludes that board characteristics

influence the earnings quality of listed Nigerian insurance companies.Hence, the study suggests that investors should

pay more attention to companies with a large number of directors, as stipulated by the NAICOM code of corporate

governance, which states that the minimum number of board members should be 7 and the maximum number should

be 15, in order to minimize earnings manipulation. NAICOM should also ensure that the terms of the code are fully

observed in order to improve the quality of earnings of Nigeria's listed insurance companies, in order to have effective

oversight by independent directors.

Keywords: Board size, Board Independence, Women Directors, Board Meetings, Earnings Quality

1. Introduction

Those that utilize financial reports for contracting and decision-making processes are interested

in the effectiveness of financial reporting quality. This is because a company's earnings, as stated

in financial statements, are a gauge of its ability to provide financial data to relevant users (Hassan

& Farouk, 2014). The earnings information of a company is an important indicator of its financial

performance. When there is less information asymmetry it means that there is enough, precise, and

reliable earnings (i.e., good quality earnings) provided by the firm to the capital market, and it

provides insight into its actual worth. A reliable financial report is also required by capital markets.

As a result, a company's financial statements must be accurate, relevant, and free from any form of

manipulation. Therefore, earnings quality is a credible representation of expected profits, and

stated profits will assist consumers in making wise financial decisions.

Finance providers, such as shareholders and debt holders, rely largely on financial statements

due to limited access to managerial information. Because financial reporting gives meaningful

information to the organization's external parties, managers have greater incentive to manipulate

earnings to their benefit (Haruna, et al., 2018). As a result, financial statements must demonstrate

the veracity and accuracy of financial information in order for shareholders to make informed

mailto:Sabomuhammad80@gmail.com
mailto:imbarde@yahoo.com

decisions. Hence, lack of precision in financial data, the shareholders and other users tend to make

incorrect judgments and decisions. Hence, an efficient corporate board can improve a company's

poor earning quality and weak financial base. The board of directors is in responsible for

supervising the actions of the company in order to fulfill its goals. They are also in charge of

making sure that reported earnings are free of all significant errors and misstatements in order to

achieve the firm's long-term goal of enhancing shareholder and market value. Effective corporate

boards, according to Chi, Lisic, et al., (2013), prevent managers' opportunistic behavior and

minimize misleading and inaccurate reporting. Therefore, the corporate governance structure set

out the rights and obligations of various corporation participants, such as the board of directors,

management, shareholders, and other stakeholders, as well as the rules and methods for taking

decisions. It also provides the structure through which the company's goals are determined, as well

as the means of achieving those goals and monitoring performance (Bandiyono, 2019).

The board of directors of a corporation is the highest executive body of the corporation, elected by

its shareholders to represent it within the legal framework. They have such responsibilities under

the Companies and Allied Matters Act 2020, and their respective articles of associat ion, as well as

all other business laws and rules. It is made up of a group of individuals tasked with making long-

term decisions concerning the company's future. Boards of directors are in charge of making policy

choices, developing strategic plans, and overseeing executive actions in order to achieve the firm's

overall goals. Because of the board's influence, it's critical to understand how decisions are made

at the board level and whether board characteristics play a significant role in decision-making in

order to achieve the firm's goals.

By adopting and implementing the decisions, the board of directors should maximize the

company's market value. While operating the company, the board of directors should ensure that

shareholders receive long-term and consistent revenue. When conducting business, the board

should pay special attention to establishing a balance between the interests of shareholders and the

company's growth potential. Hence, having a robust corporate board structure can offer a variety

of benefits, including supporting the company in producing high-quality profitability (Abubakar,

2013). Therefore, the board of directors is responsible for ensuring that the reported earnings are

free of managerial manipulation.

It is on the basis of this that the study set to evaluate the impact board attributes on earnings quality

of listed Nigerian insurance companies. It is driven by the fact that most prior studies have

excluded financial services corporations, particularly insurance companies, due to the industry's

unique reporting requirements.For this study, board attributes are seen from board size, board

independence, board meetings, and gender diversity.

The Companies and Allied Matters Act (CAMA), Cap. C20, LFN, 2020, as legislated in Nigeria,

provides that: "A director of a firm has a fiduciary duty to the firm and must act with honesty and

integrity in all transactions with or on behalf of the firm. As such, stakeholders may have concerns

about the directors' trustworthiness in their actions and responsibilities. Also, according to section

282 of the CAMA stipulates that "every director of a company shall exercise the powers and

discharge the duties of his office honestly, in good faith and the best interest of the company, and

shall exercise the degree of care, diligence, and skills, which a reasonably prudent director would

exercise in a comparable circumstance.

Furthermore, Directors must develop and maintain a high level of integrity, honesty, transparency,

and accountability in order to satisfy stakeholders and justify their actions. Similarly, section 334

of CAMA compels the company's directors to compile and publish financial statements for the

year to the company's members at the Annual General Meeting. The Board's duty is to provide the

corporation's entrepreneurial management with a framework of prudent and effective controls that

makes risk assessment and control easier. The Board of Directors should also set the company's

strategic goals, ensure that the necessary financial and human resources are in place to achieve

those goals, and assess management performance. All board members must make decisions

objectively in the company's best interests to acknowledge and fulfill their duties to its shareholders

and others (Abdullahi, 2011).

Non-executive directors, for their part, should positively challenge and assist in the creation of

development of strategy suggestions. They should monitor the progress report and analyze

management's performance in fulfilling organization's goals and objectives. They should guarantee

the integrity of financial information and financial controls, as well as the robustness and

protection of risk management systems. They are in charge of deciding the proper levels of

executive director salary, as well as hiring and removing executive directors when necessary. They

are also in charge of ensuring the quality of the reported earnings and monitoring the quality of

the information contained in financial statements.

Earnings are regarded as the most important piece of information that can help interested parties

make decisions. Because the earnings information contained in the company's annual financial

statements is so important, managers will go to great lengths to generate financial statements that

are attractive to both internal and external stakeholders. Earnings quality is used by investors to

evaluate a company and make informed judgments. As such, when investors lack access to high-

quality information on a company's earnings, they usually charge a high cost of capital to

compensate for the risk, which may have a negative impact on the overall value of the company

(Leuz& Verrecchia, 2004).

2.1 Review of Related Empirical Literature

The impact of board attributes on the quality of earnings of Nigerian conglomerate firms was

investigated by Haruna et al., (2018). To collect data from the audited accounts, a secondary source

of data was utilised. Two-step regressions were employed in order to assess the data. The results

reveal that board attribute proxies have a significant impact on the earnings quality of Nigerian

conglomerate firms. This reveals that board features are critical in minimizing unethical managerial

behavior and hence increasing earnings quality in Nigerian conglomerate companies. Egbunike

and Odum (2018) also looked into the impact of board leadership structure on the quality of

earnings in Nigerian industries. A secondary source of data collection was used to obtain data from

the audited accounts. The data was analyzed with the use of a pooled OLS regression model. The

findings show that the size and composition of the board of directors have a significant positive

effect on the earnings quality of Nigerian manufacturing companies.

Also, Tunji et al., (2019) investigated the impact of corporate governance on the quality of reported

earnings in Nigerian deposit money banks. Over a ten-year period, cross-sectional data were

collected from ten (10) Nigerian Stock Exchange-listed deposit money banks (2008-2017). Both

descriptive and inferential statistics were used to analyze the data. As a proxy for reported

earnings quality, earnings predictability was utilized, while board size, board independence, and

foreign directorship were proxies for corporate governance. The study discovered that board size

has a positive and insignificant relationship with earnings quality; board independence has a

negative but insignificant association with earnings quality; and firm size has a negative and

insignificant association with earnings quality. The research was conducted in the banking

industry. Thus, the financial sector was utilized in this study, with a focus on Nigerian insurance

companies.

In their work, Rajeevan and Ajward (2019) investigated the impact of designated corporate

governance characteristics and the degree of earnings management in a sample of Sri Lankan

public companies. A total of 70 Colombo Stock Exchange (CSE) listed companies were chosen

based on their highest market capitalization from 2015 to 2017 and represented the beverage, food

and tobacco, diversified, hotel and travel, manufacturing, oil palms, and health care sectors,

accounting for 59.9% of the CSE's total market capitalization. The study discovered a connection

between board independence and earnings management that was both positive and significant.

However, it could not find any significant effect of board size and meetings on earnings

management.

Furthermore, Schrawat et al. (2019) focused on the impact of corporate governance on India's

earnings management practices on 1613 non-financial organizations in the Indian sub-continent;

they used random-effect point estimates. The data was collected between 2004 and 2018. The

study looked at four different aspects of corporate governance: board size, CEO–chair duality,

managerial ownership, and audit committee independence, with discretionary accruals serving as

a stepping stone for determining income misappropriation. The modified Jones model (Dechow

et al., 1995) was used to generate the results for this. The empirical findings are consistent with

the corporate governance concept. The size of the board of directors, which is one of the corporate

administration features, was found to have no influence on earnings management. The analysis

confirms that in emerging countries, corporate governance essential have a detrimental impact on

the problem of earnings manipulation. The importance of the study is heightened by the

predominance of the so-called "interest conflict" between minority and majority shareholders in

emerging nations like India, as opposed to between executives and proprietors.

In Malaysia, Hashim et al. (2019) studied the link between board diversity and earnings quality

in companies listed on the Bursa Malaysia Main Market. Malaysia is a country having a diverse

population of ethnic and cultural backgrounds, which may have a positive effect on earning quality.

They also looked into whether the Internal Audit role was done in-house or outsourced as a

measure to improve the firms' earnings quality. The earning quality of the sample companies was

found to be significantly impacted by nationality, diversity, and ethnicity diversity. Gender and

age diversities, on the other hand, had no discernible impact on the quality of earnings. In related

study, Debnath et al. (2019) investigated the relationship between female board membership and

real earnings management in the setting of an emerging economy in Bangladesh. During the years

2000-2017, the study used a sample of 2193 firm-year observations listed on the Dhaka Stock

Exchange. The existence and proportion of female directors on the board, as well as the presence

of independent female directors, are all positively associated with real earnings management,

according to their research. Therefore, enterprises with female directors are more likely to engage

in higher degrees of earnings management, such

as reduced-price discounts, unfavorable lending terms, and smaller production capacities. Their

research also shows that companies with female directors are more likely to follow defensive

financial reporting strategies and deploy more income-decreasing earnings. Their colleagues in

companies with lower female representation on the board, on the other hand, are significantly less

likely to engage in similar activities. As a result, the permanence of female directors may be a

major solution to the problem of income-increasing real earnings management. As a result,

corporate governance helps to minimize real earnings management, especially when a female

director is appointed to the board.

Al-Azeez et al. (2019) investigated whether board attributes have an impact on earnings

management in global Oil and Gas Corporations. They were represented by the board

characteristics of board independence, board size, board diversity, and CEO duality. This study

used secondary data and quantitative research approach for one-year period. A sample of 71

companies from the Top 250 was chosen. Board independence has a considerable impact on

earnings management reduction, according to the findings of this study. The size of the board, on

the other hand, has no influence because a larger board is less efficient at monitoring it. It is more

difficult for board members to oversee management when there are more members on the board,

and gender diversity has a significant impact on the reduction of earnings management. In another

study, Olum et al. (2019) used data analysis of 152 companies listed on the Tehran Stock Exchange

from 2011 to 2016 to assess the impacts of female directors on the board of directors and the audit

committee (gender diversity) on earnings quality. The archive-based method was used to collect

data, and regression analysis was used to evaluate hypotheses using the unbalanced panel data

method. The findings revealed that women's participation in the audit committee had a significant

impact on the quality of earnings. Gender diversity in the board of directors, on the other hand,

had no significant effect on the company's earnings quality, according to the findings. The presence

of women's representatives in management positions improves effective supervision and the

eminence of financial reporting. This improves the quality of earnings by increasing the

independence of the board of directors and the audit committee.

In Nigeria, Oyebamiji (2020) examined the impact of board characteristics on the earnings quality

of Nigeria's public listed financial institutions. Secondary data was used in the study. The

population included all 16 financial firms listed on the Nigerian Stock Exchange. The top 10 banks

whose shares were regularly traded on the stock exchange were chosen using a targeted sample

technique. Over a ten-year period, data regarding board characteristics and earnings quality were

gathered from the selected firms audited financial statements and the Nigerian Stock Exchange

Fact book (2008-2017). Pooled ordinary least square, fixed effect, and random effect estimation

approaches were used to examine the data. The result from the study showed that board

independence and board size had a positive and negative significant relationship respectively with

earnings quality, while board meeting does not exhibit any statistical significance.

Daniel et al. (2020) investigated the impact of board size on real earnings management in Nigerian

listed companies. The expo facto research design was used, focusing on secondary data from the

listed companies' annual reports. For the 2009-2018 financial years, a simple random sample

technique was used to select 31 companies from a total of 57. The Hausman test, which

was examined using E-views 10, was utilized to carry out this purpose, and three techniques of

panel regression estimation were used: pool, fixed effect, and random effect by the Hausman test.

The data show that board size has no influence on earning management. The results indicated that

the board of directors is a corporate governance structure that helps to prevent earnings

manipulation.

Based on the above review, it is clear that none of these studies was conducted in the Nigerian
Insurance Companies, hence this necessitates the conduct of this study.

3. Methods and Techniques
The main objective of this study is to examine the effect among board attributes and earnings

quality of listed insurance companies in Nigeria from 2009 to 2018. The firms and variables

investigated in this section of the study are discussed, as well as the data distribution patterns and

statistical approaches used to investigate the impact of these variables (board size, board

independence, women directors, and board meetings) on earnings quality. The non-survey method

was used to obtain data for this investigation. This is for the fact that the accounting data needed

for this study may be found in the sampled firms published annual reports and accounts. The

population of this study includes all 27 Nigerian insurance companies that are publicly listed on

the Nigerian Stock Exchange. The criteria for selecting the working population were that the

company had to be listed by 2009 without being delisted, and that data was available for the

study period, which was 2009 to 2018. As a result, 15 companies fulfilled the criteria and were

included in the sample.In order to conduct this research, multiple regressions were used. This data

analysis technique is used to determine the effects of IV on the DV. Past research and various

studies undertaken by different scholars on the studied variables influence the choice and selection

of variables.

3.2.1 Variables of the Study and their Measurements
This study used two types of variables, the dependent and the explanatory.

3.2.2 The Dependent Variable
To measure earnings quality, this study used a cross sectional variation of the modified Jones

model (Dechow et al. 1995 and Jones 1991) using a discretionary accrual as a proxy. Discretionary

accruals have long been used as a proxy for earnings management. The modified Jones model,

according to Dechow et al (1995), is the most powerful model for evaluating discretionary

accruals. It is used by Schrawat et al., (2019), Nwoye et al., (2020), and Daniel et al., (2020) to

signify lower quality and vice versa. To back up their claim, Fodio et al. (2013) specifically used

discretionary accruals as a proxy for earnings quality in Nigerian insurance firms because all of

the variables in the model can be found in the firms' annual report and accounts, hence justify the

use of modified Jones model. Discretionary accruals can be obtained as follows:

DA = TACC – NDA

TACC=NDA+ DA

Where TACC = Total accruals

NDA = Non-Discretionary Accruals

DA = Discretionary accruals

it 0 1 it 2 it 3 4 it 5 6 it 7


TACCit = a (1/ASSETSit -1) + a1 (Δ REVit – ΔRECit) + a2 PPEit +Eit

Where TACCit = total accruals in year t for firm i

Δ REVit = revenues in year t less revenues in year t -1 for firm i

ΔRECit = receivables in year t less receivables in year t -1 for firm i

PPEit = gross property, plant and equipment in year t for firm i

Eit = error terms (residuals) in year t for firm i

All variables are scaled by total assets year t-1.

Note Eit (residuals) represents the discretionary accruals.

3.2.3 The Explanatory Variables
This comprises the independent and control variables. The independent variable is board attributes

represented by board size, board independence, board meetings and board diversity which could

be measured as follows;

a) Independent Variables
i. Board Size (BS) is the number of directors on the board (Gulzar &Zongjun, 2011; Gill

& Bigger, 2013; Tahir et al. 2019; Meirini, 2020; Fadiri et al. 2020)

ii. Board Independence (BI) is measured by the ratio of outside or non-executive directors
to the total number of directors (Hassan, 2011; Mohammad, 2012; Hassan et al. 2020;

Fadiri et al. 2020).

iii. Board Meeting (BM) is the number of meetings held by the board within a year (Ntim
& Osei, 2011; Gill & Bigger, 2013; Tahir et al. 2019)

iv. Board Diversity (BD) is the ratio of female directors to the total number of directors
(Dalton & Dalton, 2010; Ahmad et al. 2016; Gull, et al 2017; Charitau et al. 2017;

Olum et al. 2019)

b) Control Variables
i. Firm Size: The size of a company has a significant impact on its success. Bigger

corporations appear to be more profitable than smaller companies (Vijayakumar

&Tamizhselvan 2010). The board of directors of larger enterprises has a tendency to

rein in the executive directors' excesses. In this study, the natural log of total assets was

used as a proxy for firm size.

ii. Firm Age: For the purpose of this study, firm age was proxied as the number of years
since listing. This is consistent with Amran (2011), Samaila (2014) and Qasim, (2014),

who proxied age as the year of listing on the stock exchanges.

iii. Profitability: This can be calculated by dividing net profit before interest and tax by
total assets as used by Saad (2010) and Shehu (2014).

3.3 Model Specification

In order to assess the impact of board attributes on earnings quality, the study adopts with little

change the model used Haruna et al., (2018) as follows:

EQ     BS

Where:

  BI   BM   GD   PROF   FS   AGE

it it

EQ= Earning quality

BS= Board Size

BI= Board Independence

it it

BM= Board Meetings

GD= Gender diversity

PROF= Profitability

FS= Firm size

AGE = Firm Age

β0 = Intercept

β1 – β9 =Coefficients

Ԑ = error term

4. Results and discussion
The statistical software Stata (version 14) was used to examine the relationship between the study's

variables. The statistical properties of the variables in the study model are simply represented by

descriptive statistics. Such data can be found in Table 1 below. All of the variables were gathered

from the relevant information on the sampled companies' directors' reports and financial

statements.

4.1 Descriptive statistics
Table 1: Descriptive statistics result

Variables Mean Std. Dev. Min Max Skewness Kurtosis

EQ 0.094 0.087 0 0.560 1.849 8.070

BS 9.453 2.410 4 16 0.378 3.166

BI 0.655 0.112 0.380 0.91 -0.080 2.515

WD 0.133 0.117 0 0.5 0.869 3.336

BM 4.727 0.874 4 6 0.559 1.549

SIZE 9.960 0.202 9.626 10.273 -0.070 2.040

ROA 0.024 0.068 -0.099 0.126 -0.294 2.306

AGE 13.967 8.066 2 29 0.454 1.827

Source: STATA Output, 2021

Table 1 show that the average board size, as measured by the number of board members, was nine

members, with minimum and maximum values of four and sixteen members respectively. These

ratios are close to Wenhoa et al. (2020) findings of 5 and 17 for Chinese listed enterprises, and

lower than Hassan et al. (2020) findings of 3 and 15 for Egyptian firms. This research demonstrates

that the code of corporate governance for insurance companies (2009) rules for board membership

was obeyed by most of Nigerian insurance firms. On the other hand, according to the NAICOM

code of corporate governance of Nigeria, some of these companies have violated the requirement

by having four (4) members on the board of directors, which is less than the minimum number of

five (7), and by having sixteen (16) board members, which is more than the maximum number of

fifteen (15). (2009). This indicates that some Nigerian insurance businesses have failed to meet

the standards of the industry's Code of Corporate Governance (2009), which stipulated that the

board should consist of no fewer than seven and no more than fifteen members.

Also, the average level of board independence was 66 percent, with minimum and maximum

values of 38 percent and 91 percent, respectively, as shown in Table 1. It means that some of the

industry's sampled companies did not meet the minimum requirement of having at least 60% of

their board members be independent, which is below the minimum requirement; however, others

have about 91 percent of their board members be independent, which is above the minimum

requirement. This percentage is greater than Arif's (2019) findings, which showed 22 percent and

67 percent for Pakistani Listed Insurance Companies, respectively. In addition, Table 1 reveals

that Women Directorship had a mean of 13%, indicating that on average 13% of the board

members of the selected companies were women, with a minimum of 0% and a high of 50%. This

is lower than the 91 percent reported by Akpotor et al. (2019) in some chosen Nigerian companies.

According to the findings, some corporations have 100% male board members, while others have

50% female board members. The NAICOM Code of Corporate Governance does not require a

corporation to have women on its board of directors; however, diversity of board members is

advocated. The table also reveals that, on average, the boards of the selected companies held five

meetings every financial year, with values of four and six. When compared to Hassan et al. (2020),

who reported that the maximum number of meetings held by Egyptian enterprises was 15 times,

this result is lower. The standard deviation of 0.87 reveals that the number of meetings held by the

firms varied over time. This indicates that Nigerian insurance firms followed the NAICOM Code

of Corporate Governance (2009), which stipulated that the board should meet at least four times

annually.

4.2 Correlation Result
Table 2 shows the correlations between the IV’s and the DV. The table depicts the relationships

between all of the pairs of variables in the regression model, as well as the relationships between

all of the explanatory variables and the explained variable, as well as the relationships between all

of the independent variables. This provides information on the size of the independent variable

pairs.

Table 2. Spearman Correlation Matrix
VARIABL

ES
EQ

BS BI WD BM SIZE ROA AGE VIF

EQ 1.000

BS -0.222 1.000 1.24

BI 0.120 0.048 1.000 1.15

WD -0.024 -0.268 -0.075 1.000 1.09

BM -0.122 0.247 0.281 -0.071 1.000 1.18

SIZE -0.139 0.166 0.226 0.147 0.249 1.000 1.08

ROA -0.161 -0.005 0.035 0.023 0.025 0.191 1.0000 1.30

AGE -0.054 0.055 0.126 0.038 0.027 0.201 0.152 1.0000 1.06

Source: STATA Output, 2021

The correlation coefficients between the dependent variable (EQ) and the explanatory variables

are shown in Table 2. (Board Size, Board Independence, Women Directorship, Board Meetings,

Size, ROA, and Age). The path of the association is indicated by the sign of the correlation

coefficient (positive or negative). The correlation coefficient's absolute values show the strength

of the association, with bigger values suggesting more significant relationships. Since each

variable has a perfect positive linear association with itself, the correlation coefficients on the

major diagonal are 1.00. The correlation coefficient between board size and EQ is -0.222, as shown

in Table 2, which is not near to one. Also, the result shows that EQ correlates positively with board

independence (BI) The table shows that women's directorship is negatively correlated with EQ,

although the relationship is weak a coefficient of -0.024, which is far from 1. The table also shows

that EQ correlates negatively with board meetings (BM), firm size, return on assets (ROA), and

age in the Nigerian insurance companies, but the relationship is weak, as evident from the

coefficient of -0.122, -0.139, -0.54, and -0.161, respectively.

Collinearity, is said to occurs when two or more predictors are correlated, and multicollinearity,

which occurs when more than two independent variables or predictors are correlated, imply

interdependence between the predictors or independent variables and, if large in magnitude, has

a negative impact on the independent variables' predictive ability. A Variance Inflation Factor

(VIF) test was used to found whether or not there was a collinearity problem, and the results

showed that there was none. Because the variance inflation factor (VIF) test results range from a

minimum of 1.06 to a high of 1.36, a VIF of 5.00 is considered evidence of nonexistence of

collinearity (Barde 2009 and Samaila 2014). As a result, the link will have no effect on the

independent variables' capacity to forecast. Hence this research established the absence of

collinearity.

4.3 Regression Result
A regression model's goal is to figure out how an independent variable affects a dependent

variable. To assess the accuracy of the linear fit to the model, the researcher calculated the

coefficient of multiple as shown in the table below:

Table 3: OLS Regression

EQ Coefficients Std. Errors Z P> IZI

BS -0.0075019 0.0031099 -2.41 0.017

BI 0.1410018 0.0659421 2.14 0.034

WD -0.0425224 0.0626560 -0.68 0.498

BM -0.0101360 0.0086090 -1.18 0.241

SIZE -0.0341850 0.0379330 -0.90 0.369

ROA -0.1885812 0.1045447 -1.80 0.073

AGE -0.0002428 0.0008833 -0.27 0.784

Constant 0.47455530 0.3588253 1.32 0.188

R-square 11.70

Adjusted R
2
07.35

Probability 0.0121

Source: STATA Output, 2021

As a proxy for earnings quality, discretionary accrual (DA) was used. A negative association

indicates lower earnings management, which leads to higher earning quality, and vice versa. Table

3 shows that the explanatory variables (BS, BI, WD, BM, SIZE, AGE, and ROA) examined by

the model explain 12 percent of the change in EQ with a cumulative R2 of 0.117. Other variables

not included in the model account for about 88 percent of the variation in the

variable. It's also worth noting that the model is accurate (0.0121). This indicates that the entire

model fits the level of variability between the dependent and explanatory variables.

At a 5% level of significance, the data show a negative and significant association between board

size and discretionary accruals, with a negative Z value of -2.41 and a p-value of 0.017.

Furthermore, the negative coefficient of -0.0075 shows that increasing the board size by one person

while keeping all other variables constant will improve the quality of reported earnings of Nigerian

listed insurance companies. This indicates that the board is monitoring the operations of the

management in order to prevent earnings manipulation. It also supports the stakeholders' theory,

which says the board should consist of many members as more members in the board lead to the

reduction of earnings management. These findings is consistent with the findings of Fodio et al.

(2013), Ibrahim (2013), Wali (2014), Lilian et al. (2016), Egbunike& Odum (2018), and Khan et

al. (2019), who discovered that board size improved the level of earnings quality. But is contrary

to that of Rahman & Ali (2006), Ahmed et al. ((2006), Salihi (2014) and Oyebamiji (2020), who

revealed that larger board does not improve the quality of reported earnings. However, contrary to

the position of Schrawat et al. (2019), Tunji et al. (2019), Al Azeez (2019), Hassan et al. (2020),

and Daniel et al. (2020), who documented that board size does not determine earnings quality.

Table 3 further shows that, at a 5% level of significance, board independence, as defined by the

proportion of independent directors on the board, is positively and significantly associated to

discretionary accruals. With a positive coefficient of 0.1410, this is proven. Unfortunately, this

implies that independent directors do not monitor or manage executive directors' excesses. As a

result, they are unable to defend and protect the interests of shareholders and other stakeholders.

Independent directors are not influenced by management and are capable of efficiently monitoring

executive directors and increasing the quality of financial information provided to users (Ibrahim,

2013). Furthermore, the research shows that increasing the number of independent members on a

board has a positive effect on the quality of earnings of Nigerian insurance companies. This could

be because outside members aren't involved in the company's day-to-day operations; their

presence, on the other hand, could serve as an effective monitoring tool for the board, resulting in

higher-quality financial reports. Lilian et al. (2016), Fadizilah (2017), Schrawat et al. (2019), and

Oyebamiji et al. (2019) have all shown similar results. They discovered a link between board

independence and earnings management that was both positive and significant. Sukeecheep et al.

(2013), Fodio et al. (2013), Ibrahim (2013), Wali (2014), Al Azeez (2019), Samaila (2014),

Egbunike& Odum (2018), and Hassan et al (2020) on the other hand discovered that board

independence has no effect on the quality of earnings.

Furthermore, women's directorship has a negative and insignificant connection with discretionary

accruals at the quoted insurance companies in Nigeria. This suggests that board diversity has no

impact on the reported earnings of Nigerian insurance companies. A p-value of

0.498 and a coefficient of -0.0425, respectively, support the conclusion. This result is consistent

with Hashim et al. (2019) and Olum et al. (2019), but not with Shuaibu (2014), Abubakar et al.

(2017), and Al Azeez et al. (2019). According to the authors, board diversity has a negative and

significant impact on earnings management. But Hoang et al. (2014) discovered a significant

positive effect of board diversity on the reported earnings quality.

Meetings of the board have a negative but statistically insignificant effect on financial reporting

quality. The coefficient of -0.0101 and the p-value of 0.241 support this conclusion. Sukeecheep

et al. (2013), Rajeevan &Ajward (2019), Al-mukit&Keyamoni (2019), Hassan et al. (2020), and

Oyebamiji et al. (2020) disagree with this. This research suggests that frequently meeting boards

do not make actions that increase the quality of reported earnings. They only meet to discuss

matters unrelated to the reported earnings' quality. Al-Shammari (2010), Samaila (2014), Shuaibu

(2014), and Mustapha et al. (2010) all disagree with the findings (2019).

5. Conclusions and Recommendations
The need of having an effective board of directors cannot over emphasized, because in

corporations, the owners are usually kept distinct from the managers, even when the owners are

part of the management (particularly the Board of Directors). The board of directors is in charge

of regulating the company's operations and monitoring management's activities to ensure that the

company's earnings are free of manipulation and of high quality. According to the findings, the

size and independence of the board of directors have a significant impact on the earnings quality

of Nigerian insurance companies. However, women's directorships and board meetings have no

impact on the earnings quality of publicly traded insurance companies. Hence, the paper concludes

that, based on the study's findings, board size is an important indicator of earnings quality, and that

board attributes mechanism plays a crucial role in determining the earnings quality of Nigeria's

listed insurance companies. Furthermore, board size is a crucial indicator of the earnings quality

of listed insurance companies in Nigeria, as most of the industry's companies follow the NAICOM

code of corporate governance 2009, which requires the appointment of a minimum of four and a

maximum of fifteen board members. It illustrates that having a larger board reduces earnings

management operations and hence enhances the quality of earnings.As the number of independent

board members grows, however, board independence has a negative impact on the quality of

reported earnings. This suggests that executive directors' excesses are not monitored and

controlled by independent directors. As a result, they are unable to defend and protect the interests

of shareholders and other stakeholders. Based on the above conclusion the study suggest that

Investors should pay attention to companies with a large number of directors, as per the NAICOM

code of corporate governance, which specifies that the minimum number of board members should

be 7 and the maximum number should be 15, guaranteeing that earnings manipulation is

minimized. NAICOM shall guarantee that the terms of the code are fully observed in order to

improve the quality of earnings of Nigeria's listed insurance companies, in order to have effective

oversight by independent directors.

The research further suggests that more research be done on the same problem in a different sector

or industry, and that other aspects of board structure and earnings quality attributes not included

in this study be included.

References
Abubakar, A. (2013). Corporate Governance and Discretionary Loan Loss Provision in deposit Money

Banks in Nigeria. Ahmadu Bello University, Zaria: Maters Thesis.

Abubakar, I. A., Rokiah, B. I., & Sitraselvi, A. C. (2017). The Effect of Board Attributes on Real Eranings

Management in Nigerian FInancial Institutions. Journal of Accounting, Business and Finance

Research, 1(1), 76-83.
Ahmad, I., Ahmed, F., Abid, A., & Abdulaziz, A. (2016). Corporate Governance Attributes and Firm Value:

Evidence from Pakistan. Research Journal of Finance, 7(7).

Ahmed, K., Hossain, M., & Adams, M. B. (2006). The Effects of Board Composition and Board Size on

the Informativeness of Annual Accounting Earnings. Corporate Governance an International
Review, 14(5), 418-431.

Akpotor, V. A., Osemwengie, O. F., & Imuentinyan, E. C. (2019). Corporate Board Diversity and Au dit

Quality. Journal of Accounting, Business and Social Sciences, 1(2), 83-100.
Al-Mukit, D. M., & Keyamoni, J. T. (2019). Corporate Governance and Earnings Management Practices

among Listed Firms: A study on Post Stock Market Crisis period in Bangladesh. Journal of Asian

Business Strategy, 9(1), 1-9.

Alshammari, A. (2010). Corporate Governance and Earnings Management in Saudi Listed Firms.
Malaysia: Un Published Maters Thesis Universiti Utara.

Amran, N. A. (2011). Corporate Governance Mechanisms and Company Performance: Evidence from

Malaysian Companies. International Review of Business Research, 7(6), 101-114.

Arif, H. M. (2019). Corporate Governance and Financial Performance: A Pragmatic Investigation from
Insurance Industry of Pakistan. Net Journal of Business Management, 6(2), 8-16.

Bandiyono, A. (2019). The efect of Good Corporate Governance on Poltical Connection on Firm Value.

Journal Akuntansi, 23(3), 333-348.
Barde, I. M. (2009). An Evaluation of Accounting Information Disclosure in the Nigerian Oil Marketing

Industry. Kano: Un Published Thesis Submitted to Department of Accounting, Bayero University.

CAMA. (2020). Companies and Allied Matters Act.
Charitou, A., Georgiou, I., & Soteriou, A. C. (2017). Corporate Governance, Board Composition, Director

Expertise and Value: The Case of Qulaity Excellence. Multinational Finance Journal, 20(3), 181-

236.

Chi, W., Lisic, L. L., Long, X., & Wang, K. (2013). Do Regulations limiting management influence over
Auditors improve Audit Quality: Evidence from China. Journal of Accounting and Public Policy,

32(2), 176-187.

Dalton, D. R., & Dalton, C. M. (2010). Women and Corporate Board of directors: The promise of increased

and substantive paticipation in the post-Sarbanes -Oxley era. Business Horizons, 53(3), 257-268.
Daniel, E. K., Ameh, J., & Aza, s. (2020). The Effect of Board Size on Real Earnings Managementof

Financial Institution in Nigeria. Bingham University Journal of Accounting and Business, 1-13.

Debnath, N. C., Patnaik, B. C., & Satpathy, I. (2019). Female Directorship and Real Earnings Management

in Bangladesh: Towards an Analytical Assessment. Management Science Lteers, 9(2019), 1723-
1740.

Dechow, P. M., Sloan, R. G., & Sweetney, A. P. (1995). Detecting Earnings Management. Accounting

Review, 193-225.

Egbunike, C. F., & Odum, A. N. (2018). Board Leadership Structure and Earnings Quality: Evidence from

Quaoted Manufacturing Firms in Nigeria. Asian Journal of Accounting Research, 3(1), 82- 111.

Fadiri, A., Ramzan, S., Arif, M., & Shoukat, A. (2020). Corporate Governance and Firm Value: An
Empirical study on Manufacturing Companies Listed on Pakistan Stock Exchange. AL-Qalam,

Institute of Islamic Studies, 25(1), 227-243.

Fadzilah, N. M. (2017). Board of Directors Characteristics and Earnings Management of Family Owned
Companies. International Journal of Accounting and Business Management, 5(2).

Fodio, M. I., Ibikunle, J., & Chiedu, V. (2013). Corporate Governance Mechanism and Reported Earnings

Quality in Nigerian Insurance firm. International Journal of Finance and Accounting, 2(5), 279-

286.
Gill, A. S., & Bigger, N. (2013). The Impact of Corporate Governance on Working Capital Management

Efficiency of America Manufacturing Firms. Managerial Finance, 39(2), 116-132
Gull, A. A., Nekhili, M., Nagati, H., & Chtioui, T. (2017). Beyond Gender Diversity: How Specific

Attributes of Female Directors affect Earnings Management. The British Accounting Review, 1-2

Gulzar, M. A., & Zongjun , W. (2011). Corporate Governance Characteristics and Earnings Management:

Emperical evidence from Chinese Listed Firms. International Journal of Accounting and Financial
Reporting, 1(1), 133-151.

Haruna, D., Kwambo, L. M., & Hassan, S. U. (2018). Board Characteristics and Earning Quality of Listed

Conglomerates Firms in Nigeria. International Journal of Business Policy and Governance, 5(3),

14-37.

Hashim, F., Ahmed, E. R., & Huey, Y. M. (2019). Board Diversity and Earnings Quality: examining the

role of Internal Audit as moderator. Australasian Accounting, Business and Finance Journal, 13(4),

74-91.

Hassan, A. E., Soliman, M. M., Ragab, A. A., & Rageb, M. A. (2020). The Effect of Corporate Governance

Mechanisms on Earnings Management in Egyptian LIsted Firms in Stock Market. International

Journal of Scientific Engineering Research, 11(4), 1609-1628.

Hassan, S. U. (2011). Corporate Governance and Financial Reporting quality: A Case Study of Nigerian

Money Deposit Bank. International Journal of Research in Computer Application and

Management, 1(26), 12-1
Hassan, S., & Farouk, M. (2014). Firm Attributes and Earning Quality of Listed Oil and Gas Companies in

Nigeria. Research Journal of Finance and Accounting, 5(17), 11 - 17.

Ibrahim, M. (2013). Corporate Governance Mechanism and Earnings Quality of Nigerian Deposit Money

Banks. Accounting Frontiers, 69.
Jones, J. (1991). Earnings Management during Import relief Investigations. Journal of Accounting, 29(2),

193-223.

Khan, M. A., Khidmat, W. B., Ullah, F., & Khan, N. U. (2019). Corporate Governance and Earnings
Management: The Role of the Board of Board of Directors. Sarhad Journal of Management

Sciences, 5(2), 317-342.

Leuz, C., & Verrecchia, R. E. (2004). Firm's Capital Allocation Choices, Information Quality and Cost of

Capital. 25.
Lilian, O. N., Ferry, B. G., Clifford, O. O., & Solomon, E. (2016). Corporate Governance and Earnings

Quality of Listed Banks in Rivers State. International Journal of Business and Management

Invention, 5(7), 29-33.
Meirini, D. (2020). The effcet of Corporate Governance and Reporting Quality on Firm Value. Journal of

Islamic Accounting, 1(1), 1-16.

Mohammed, F. (2012). The Impact of Corporate Governance on Banks Performance in Nigeria. Journal of

Emerging Trends in Economics and Management Sciences, 3(3), 257-260.
Mustapha, U. A., Rashid, N. N., Lateef, S. A., & Bala, A. (2019). The Effect of Corporate Governance

Attributes on Audit Quality in Nigeria. International Journal of Recent Technology and

Engineering, 8(4), 4882-4886.

National Insurance Commission (NAICOM) Code of Corporate Governance of Insurance Companies 2009.
Ntim, C. G., & Osei, K. A. (2011). The impact of Corporate Board Meetings on Corporate Performance in

South Africa. African Review of Economics and Finance, 2(2).

Nwoye, C. M., Anichebe, A. S., & Osegbue, I. F. (2020). Effect of Audit Quality on Earnings Management
in Insurance Companies in Nigeria. Athens Journal of Business and Economics, 6, 1-29.

Olum, M. K., Barandagh, M. I., & Abdi, M. (2019). The Impact of Gender Diversity in Board of Directors

and Audit Committee on Earnings Quality. Journal of Accounting Knowledge, 10(1).

Oyebamiji, O. A. (2020). Board Attributes and Earnings Quality of Listed Financial Firms In Nigeria.
Journal of Business Management and Marketing, 3(5), 38-45.

Qasim, A. (2014). The Impact of Corporate Governance on Firm Performance: Evidence from the UAE.

European Journal of Business Management, 6(22), 118-124.
Rahman, R. A., & Ali, F. H. (2006). Board Audit Committee, Culture and earnings Management: Malaysian

Evidence. Managerial Auditing Journal, 21(7), 783-804.

Rajeevan, S., & Ajward, S. (2019). Board Characteristics and Earnings Management in Sri Lanka.

Journal of Asian Business and Economic Studies, 27(1), 1-18.
Saad, A. N. (2010). Corporate Governance and Audit Qualification: Empirical study from Saudi Arabia

and Oman. Malaysia: Masters Thesis.

Salihi, A. A. (2014). The Relationship between Board Characteristics nd Earnings Management in

Nigerian Listed Companies. Malaysia: Un Published M.SC thesis, Universiti Utara.
Samaila, I. A. (2014). Corporate Governance and Financial Reporting Quality in the Nigerian Oil

Marketing Industry. (Unpublished Doctoral Thesis) Bayero University, Kano.

Sehrawat, N. K., Kumar, A., Lohia, N., Bangal, S., & Agarwal, T. (2019). Impact of Corporate Governance

and Earnings Management: Large sample evidence from India. Asian Economics and Financial
Review, 9(12), 1335-1345.

Shehu, M. (2014). The relationship between Corporate Governance and Dividend Payout Ratio:

Evidencefrom Malaysia. Malysia: M.sc Thesis.

Shuaibu, H. (2014). Impact of Board Characteristics on Earnings Management of Foods and Beverages

Companies in Nigeria. Journal of Accounting Research, 10(2), 67-88.

Sukeecheep, S., Yarram, S., & Al-Farooque, O. (2013). Earnings Management and Board Characteristics
in Thai Listed Companies. A paper presented at the International Conference on Business,

Economics and Accounting. Bangkok-Thailand.
Tahir, S. H., Asif, M., Sarwar, R., Shabir, G., & Haider, K. (2019). Mediation role of Financial Health to

Concomitant of Corporate Governance and Firm Value. Blaymes, 12(4), 52.

Tunji, S. T., Ifeanyi, O. P., Chibuzo, O. O., & Adeleye, O. R. (2019). Corporate Governance and Reported
Earnings Quality in Deposit Money Banks in Nigeria. International Journal of Business

Management Review, 7(5), 26-37.

Vijayakumar, A., & Tamizhselvan, P. (2010). Corporate Size and Profitability: An emperical Analysis.
Journal of Bloomers of Research, 3(1), 44-53.

Wali, A. B. (2014). Board Size, Composition and Financial Reporting Quality of Listed Manufacturing
Firms in Nigeria. Journal of Nigerian Accounting Association, 16(1), 177-197.

IMPACT OF BOARD ATTRIBUTES ON EARNINGS QUALITY OF LISTED INSURANCE COMPANIES IN NIGERIA
1. Introduction
2.1 Review of Related Empirical Literature
3. Methods and Techniques
3.2.1 Variables of the Study and their Measurements
3.2.2 The Dependent Variable
3.2.3 The Explanatory Variables
a) Independent Variables
b) Control Variables
3.3 Model Specification
4. Results and discussion
4.1 Descriptive statistics
4.2 Correlation Result
Table 2. Spearman Correlation Matrix
4.3 Regression Result
Table 3: OLS Regression
5. Conclusions and Recommendations