Gusau Journal of Accounting and Finance (GUJAF) Vol. 4 Issue 1, April, 2023 ISSN: 2756-665X A Publication of Department of Accounting and Finance, Faculty of Management and Social Sciences, Federal University Gusau, Zamfara State -Nigeria Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 ii © Department of Accounting and Finance Vol. 4 Issue 1 April, 2023 ISSN: 2756-665X A Publication of Department of Accounting and Finance, Faculty of Management and Social Sciences, Federal University Gusau, Zamfara State -Nigeria All Rights reserved Except for academic purposes no part or whole of this publication is allowed to be reproduced, stored in a retrieval system or transmitted in any form or by any means be it mechanical, electrical, photocopying, recording or otherwise, without prior permission of the Copyright owner. Published and Printed by: Ahmadu Bello University Press Limited, Zaria Kaduna State, Nigeria. Tel: 08065949711, 069-879121 e-mail: abupress2013@gmail.com abupress2020@yahoo.com Website: www.abupress.com.ng mailto:abupress2013@gmail.com Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 iii EDITORIAL BOARD Editor-in-Chief: Prof. Shehu Usman Hassan Department of Accounting, Federal University of Kashere, Gombe State. Associate Editor: Dr. Muhammad Mustapha Bagudo Department of Accounting, Ahmadu Bello University Zaria, Kaduna State. Managing Editor: Umar Farouk Abdulkarim Department of Accounting and Finance, Federal University Gusau, Zamfara State. Editorial Board Prof.Ahmad Modu Kumshe Department of Accounting, University of Maiduguri, Borno State. Prof Ugochukwu C. Nzewi Department of Accounting, Paul University Awka, Anambra State. Prof Kabir Tahir Hamid Department of Accounting, Bayero University, Kano, Kano State. Prof. Ekoja B. Ekoja Department of Accounting, University of Jos. Prof. Clifford Ofurum Department of Accounting, University of PortHarcourt, Rivers State. Prof. Ahmad Bello Dogarawa Department of Accounting, Ahmadu Bello University Zaria. Prof. Yusuf. B. Rahman Department of Accounting, Lagos State University, Lagos State. Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 iv Prof. Suleiman A. S. Aruwa Department of Accounting, Nasarawa State University, Keffi, Nasarawa State. Prof. Muhammad Junaidu Kurawa Department of Accounting, Bayero University Kano, Kano State. Prof. Muhammad Habibu Sabari Department of Accounting, Ahmadu Bello University, Zaria. Prof. Okpanachi Joshua Department of Accounting and Management, Nigerian Defence Academy, Kaduna. Prof. Hassan Ibrahim Department of Accounting, IBB University, Lapai, Niger State. Prof. Ifeoma Mary Okwo Department of Accounting, Enugu State University of Science and Technology, Enugu State. Prof. Aminu Isah Department of Accounting, Bayero University, Kano, Kano State. Prof. Ahmadu Bello Department of Accounting, Ahmadu Bello University, Zaria. Prof. Musa Yelwa Abubakar Department of Accounting, Usmanu Danfodiyo University, Sokoto State. Prof. Salisu Abubakar Department of Accounting, Ahmadu Bello University Zaria, Kaduna State. Dr. Isaq Alhaji Samaila Department of Accounting, Bayero University, Kano State. Dr. Fatima Alfa Department of Accounting, University of Maiduguri, Borno State. Dr. Sunusi Sa'ad Ahmad Department of Accounting, Federal University Dutse, Jigawa State. Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 v Dr. Nasiru A. Ka’oje Department of Accounting, Usmanu Danfodiyo University Sokoto State. Dr. Aminu Abdullahi Department of Accounting, Usmanu Danfodiyo University Sokoto, State. Dr. Onipe Adebenege Yahaya Department of Accounting, Nigerian Defence Academy, Kaduna State. Dr. Saidu Adamu Department of Accounting, Federal University of Kashere, Gombe State. Dr. Nasiru Yunusa Department of Accounting, Ahmadu Bello University Zaria. Dr. Aisha Nuhu Muhammad Department of Accounting, Ahmadu Bello University Zaria. Dr. Lawal Muhammad Department of Accounting, Ahmadu Bello University Zaria. Dr. Farouk Adeza School of Business and Entrepreneurship, American University of Nigeria, Yola. Dr. Bashir Umar Farouk Department of Economics, Federal University Gusau, Zamfara State. Dr Emmanuel Omokhuale Department of Mathematics, Federal University Gusau, Zamfara. State Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 vi ADVISORY BOARD MEMBERS Prof. Kabiru Isah Dandago, Bayero University Kano, Kano State. Prof A M Bashir, Usmanu Danfodiyo University Sokoto, Sokoto State. Prof. Muhammad Tanko, Kaduna State University, Kaduna. Prof. Bayero A M Sabir, Usmanu Danfodiyo University Sokoto, Sokoto State. Prof. Aliyu Sulaiman Kantudu, Bayero University Kano, Kano State. Editorial Secretary Usman Muhammad Adam Department of Accounting and Finance, Federal University Gusau, Zamfara State. Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 vii CALL FOR PAPERS The editorial board of Gusau Journal of Accounting and Finance (GUJAF) is hereby inviting authors to submit their unpublished manuscript for publication. The journal is published in two issues of April and October annually. GUJAF is a double-blind peer reviewed journal published by the Department of Accounting and Finance, Faculty of Management and Social Sciences, Federal University Gusau, Zamfara State Nigeria The Journal accepts papers in all areas of Accounting and Finance for publication which include: Accounting Standards, Accounting Information System, Financial Reporting, Earnings Management, , Auditing and Investigation, Auditing and Standards, Public Sector Accounting and Auditing, Taxation and Revenue Administration, Corporate Governance Issues, Corporate Social Responsibility, Sustainability and Environmental Reporting Issue, Information and Communication Technology Issues, Bankruptcy Prediction, Corporate Finance, Personal Finance, Merger and Acquisitions, Capital Structure, Working Capital Management, Enterprises Risk Management, Entrepreneurship, International Business Accounting and Finance, Banking Crises, Bank’s Profitability, Risk and Insurance Issue, Islamic Finance, Conventional and Islamic Banks and so forth. 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Finally, manuscript should be send to our email address elfarouk105@gmail.com and a copy to our website on journals.gujaf.com.ng http://www.gujaf.com.ng/ Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 viii PUBLICATION PROCEDURE After receiving a manuscript that is within the similarity index threshold, a confirmation email will be send together with a request to pay a review proceeding fee. At this point, the editorial board will take a decision on accepting, rejecting or making a resubmission of the manuscript based on the outcome of the double-blind peer review. Those authors whose manuscript were accepted for publication will be asked to pay a publication fee, after effecting all suggested corrections and changes made on the manuscript. All corrected papers returned within the specified time frame will be published in that issue. PAYMENT DETAILS Bank: FCMB Account Number: 7278465011 Account Name: Gusau Journal of Accounting and Finance FOR INQUIRY The Head, Department of Accounting and Finance, Federal University Gusau, Zamfara State. elfarouk105@gmail.com +2348069393824 FOR MORE INFORMATION, CONTACT The Editor-in-Chief on +2348067766435 The Associate Editor on +2348036057525 OR visit our website on www.gujaf.com.ng or journals.gujaf.com.ng http://www.gujaf.com.ng/ http://www.gujaf.com.ng/ Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 ix CONTENTS Board Characteristics and Earnings Management of Listed Consumer Goods Firms in Nigeria Benjamin Gwabin Joseph, Murtala Abdullahi PhD, Benjamin Kumai Gugong PhD 1 Dividend Policy and Value of Listed Non-Financial Companies in Nigeria: The Moderating Effect of Investment Opportunity Abubakar Umar 18 Trialability and Observability of Accrual Basis International Public Sector Accounting Standards Implementation in Nigeria Aliyu Abdullahi Ahmed PhD, Zakari Usman 35 Liquidity Risk and Performance of Non-Financial Firms Listed on the Nigerian StockExchange Muhammed Alhaji Abubakar, Nurnaddia Binti Nordin PhD, Abubakar Hamisu Umar 54 Board Diversity, Political Connections and Firm Value: An Empirical Evidence from Financial Firms in Nigeria Rofiat Oyetunji, Isah Shittu PhD, Ahmed Bello PhD. 75 Moderating Effect of Bank Size on the Relationship between Interest Rate, Liquidity, And Profitability of Commercial Banks in Nigeria Shehu Usman Hassan, Bello Sabo (Ph. D), Ismai'l Idris Tijjani (Ph. D), Idris Ahmed Aliyu. (Ph. D) 96 Sources of Health Care Financing Among Surgical Patients Seen at the Dalhatu Araf Specialist Hospital Lafia Nasarawa State Nigeria Ahmed Mohammed Yahaya, Babatunde Joseph Kolawole, Bello Surajudeen Oyeleke 121 Transparency, Compliance and Sustainability of Contributory Pension Scheme in Nigeria Olanrewaju Atanda Aliu (Ph. D), Mohamad Ali Abdul-Hamid (Ph. D), Salami Suleiman (Ph. D), Salam Mudathir Olanrewaju 135 Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 x Examining the Impact of Working Capital Management on the Financial Performance of Listed Industrial Goods Entities in Nigeria 151 Sani Abdulrahman Bala (Ph. D), Jamilu Jibril, Taophic Olarewaju BAKARE Corporate Governance Factors and Tax Avoidance of Listed Deposit Money Banks in Nigeria 171 Sani Abdulrahman Bala (Ph. D), Umar Salim Ibrahim, Samaila Dannana Risk Committee Demographic Traits: A Study of the Impact of Expertise on Risk Disclosure Quality of Listed Insurance Firms in Nigeria Wada Najib Abbas, Dandago, Kabiru Isa (Ph. D), Rabiu, Naja’atu Bala 192 Moderating Effect of Audit Committee on the Relationship Between Audit Quality and Earnings Management of Listed Non-Financial Services Firms in Nigeria Ahmad Muhammad Ahmad, Lubabah Mansur Kwanbo (Ph.D.), Shehu Usman Hassan (Ph.D.) Musa Suleiman Umar (Ph.D.) 216 Determinants of Audit Opinion of Negative-Book-Value Firms in Nigeria: Firm Value and Audit Characteristics Perspective Asma’u Mahmood Baffa (Ph. D), Lawal Mohammed (Ph.D.), Ahmed Bello (Ph.D.) Umar Farouk Abdulkarim 237 Intervention Announcements and Naira Management: Evidence from the Nigerian Foreign Exchange Market Adedeji Daniel Gbadebo 254 Is There Earnings Discontinuity After the Implementation of IFRS in Nigeria? Adedeji Daniel Gbadebo 275 Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 75 BOARD DIVERSITY, POLITICAL CONNECTIONS AND FIRM VALUE: AN EMPIRICAL EVIDENCE FROM FINANCIAL FIRMS IN NIGERIA Rofiat Oyetunji Department of Accounting, A.B.U Business School Ahmadu Bello University, Zaria, Nigeria rofiato553@gmail.com Isah Shittu Department of Accounting, A.B.U Business School Ahmadu Bello University, Zaria, Nigeria Ahmed Bello Department of Accounting, A.B.U Business School Ahmadu Bello University, Zaria, Nigeria Abstract The effect of board diversity, political connections and firm value of listed financial service firms in Nigeria is investigated in this study. Firm value, proxied by Tobin's q and computed as the ratio of the firm's market value of equity to the book value of total assets, is the study's explained variable, while board gender diversity, board nationality, board ethnic diversity, and political connections are the study's explanatory variables. The study’s population consists of fifty-one (51) listed financial service firms on the Nigerian Stock Exchange as at 31st December 2020. Thirty-five (35) of these firms made up the sample size for a period of nine years (2012-2020). Data was gathered from the annual reports of the sampled companies and analyzed using the feasible generalized least square regression (FGLS) approach. According to the study, board gender diversity, board nationality, and board ethnic diversity have a positive significant effect on the firm value of listed financial service firms in Nigeria, whereas political connections had a positive but minor effect. According to the findings, the boards of directors of listed financial service organizations in Nigeria should ensure that females are considered for directorship seats on the boards in order to increase their value, as suggested by the resource dependency theory. Also, the board should be made up of foreign directors in order to lure foreign investors to the firm and enhance its value. In addition, the boards of directors of listed financial services firms in Nigeria should consist of a mix of both northerners and southerners to improve firm value. Keywords: board diversity, political connections, firm value, financial service firms, Nigeria. https://doi.org/10.57233/gujaf.v4i1.201 1. Introduction A firm's primary aim is to maximize shareholder’s wealth by growing the firm's value. Maximizing firm value is important for businesses because it requires rising mailto:rofiato553@gmail.com Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 76 shareholder’s capital. A good firm value should entice investors to the business (Shuaibu, Ali, & Amin, 2019). The value of a firm is one of the most critical measures of its success. It aids businesses in establishing reputation, attracting money, and contributing to a nation's strong economic prospects (Nhan & Quy, 2016). According to Guardian (2018), Investors expressed shock at the rate of decline in value of their investments on the Nigerian exchange group (NGX). They noted that some publicly traded businesses in the financial service sector in Nigeria have weak corporate governance frameworks, adding that this weak management results in dividend payments being withheld mostly because of negative retained earnings. These negative retained earnings can affect the firm value and make investing in these companies less appealing to investors. The financial sector is vital to any country's economic growth and development. This is due to the fact that it affects the amount of money stocks by making payments and extending credit. Similarly, financial systems play a significant role in accelerating economic development, and a well-structured financial sector could be a source of economic growth. Savings mobilization and well-organized financial intermediation roles will be among the advantages extracted from a strong and developed financial system. As a result, the collapse of this sector has an impact on a country's entire economy (Onyekwere, Wesiah, & Danbatta, 2019). On the other hand, corporate governance standards and procedures are increasingly being recognized as significant in deciding and exercising corporate control in the use of a company's assets and resources. On their part, Investors are gradually opting to invest based on the company's outlook, credibility, and corporate governance practices. This means that businesses must adopt corporate governance cultures and practices in order to attract foreign investors and boost their company’s sustainability and competitiveness. As a result, proper processes and mechanisms of corporate governance like those seen in the western world, the European Union, and Japan, are required for the long-term survival of businesses, especially in developing countries such as Africa (Mlthiria & Musyoki, 2014). Corporate governance practices are expected to boost a company's value. It is expected to raise the worth of companies who practice it than those companies that do not. In the long run, good corporate governance practices can improve stock returns and increase the value of a company. Corporate governance is among the most critical factors in increasing economic efficiency and development thereby increasing investor trust. An effective corporate governance system in an organization contributes to the level of trust required for a well-functioning financial sector (Haryono & Paminto, 2015). Due to corporate failures and Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 77 generally low corporate profits around the world, the reliability of existing corporate governance mechanisms has been called into question. This is because strong corporate governance is critical for optimal growth of the economy (Ongore & K’Obonyo, 2011). The consequences of poor corporate boards on businesses and national economies have prompted governments around the world to take steps to improve corporate governance. Diversifying the corporate board of directors is one of these steps (Garba & Abubakar, 2014). Diverse boards of directors have a significant impact on the company’s value, asset maximization, and investor's trust (Hassan & Marimuthu, 2014). The importance of board diversity in determining the value of a company will encourage firms to make informed decisions about appointment of board of directors in order to maximize the value of the firm (Olaoti, 2016). According to Carter, Simkins, Souza and Simpson (2007), a more diverse or heterogeneous board has the ability to make important decisions while considering more alternatives than a homogenous board. Individuals from various backgrounds and locations have a better knowledge of the company’s market, which improves the effectiveness of innovation and creativity by knowing what the market wants. Since contributions are made by individuals of various backgrounds, a diverse board is easily equipped with ideas on better ways to treat their customers. As a result, customer satisfaction and the firm's goodwill or image will improve. This would improve consumer perceptions of the business and its goods while also growing the firm's value in order to draw investors. Female participation among company directors may strengthen corporate governance and raise the company's value. Women have qualities that can help improve companies’ performance and, as a result, improve the value of the firm. They are, on average, younger than their male colleagues, giving them a competitive advantage. Better communication and new ideas are some of the advantages (Mintah and Schadewitz 2018). Furthermore, having international directors on the board of directors’ assists in persuading foreign investors that the organization is operating in their best interests (Fidanoski, Simeonovoski, & Mateska, 2014). Ethnic diversity would help to create a higher degree of corporate governance, as well as the board of directors' decision-making process, and thereby increase the firm's value. This is because people of various ethnic backgrounds are more inclined to approach challenges in unique ways, encouraging the board to explore a larger variety of ideas and strategies when it comes to addressing organizational issues (Olaoti 2016). Furthermore, political connections are another major factor in every business environment. Companies with political connections are granted Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 78 preferential treatment by the government, including lower funding costs, favorable tax treatment, and access to limited licenses (Niessen & Ruenzi, 2010). According to vanguard (2018), a total of nineteen firms registered on the Nigerian stock market were subjected to hostile takeovers when stock values fell below par value. The stocks were exposed to low valuation when the NSE scrapped the years-old nominal value price floor of 50 kobo which share prices could not fall below. Fourteen out of the nineteen companies affected are insurance, while the other five come from other sectors. According to capital market operators and shareholders, the new nominal value policy, which presently enables quoted firms to sell for as little as one kobo, can ultimately result in forcible acquisitions and management changes because if the stock becomes too cheap or the price falls too low, the firm's value would be affected. This could result in a hostile takeover. They urged businesses that are affected by the policy to revise their procedures and re-strategize in order to provide the best possible value to their shareholders. The board of directors has faced criticism as a result of the decline in shareholders’ value caused by excessive corporate mismanagement, which has resulted in the demise of many well-established organizations around the world in recent years. Such corporate failures have been linked to the board of directors' failure to perform effective supervision tasks over the businesses to which they have been entrusted (Garba & Abubakar, 2014). As a result, attention has been focused on a company's decision-making process in order to create a balanced board that will make the best decisions possible and provide optimum value to the shareholders (Najjar 2013). Forbes and Miliken (2009) pointed out that, while a diverse board is likely to have differing viewpoints, it may face communication and teamwork difficulties as a result of failing to understand other members' experience in the problem-solving process. In addition, in 2018, the CBN Governor Godwin Emefiele argued that weak corporate governance and non- compliance with legislation, lead significantly to chronic corporate failures in Nigeria and other parts of the world. The CBN Governor further argued that the board's relinquishment of power to corporate executives that serve their own self-interests, as well as the board's failure to fulfill its obligation to stakeholders, and inability to carry out their oversight duties effectively would have a detrimental effect on the firm's value. Fair and reasonable persons with diverse qualities should be designated into the board of firms in order to help improve their firm value (The nation, 2018). Although prior literatures examined how board diversity affects firm value (Woschkowiak, 2018; Nguyen, 2016;Hassan & Marimuthu, 2016;Darmadi, 2012). However, these studies did not Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 79 examine political connections. Yusoff, Norwahida and Salleh (2014) investigated political connections and firm value but their study was for a one year period and was not carried out in Nigeria. There is a need to examine the effect of board diversity and political connections on firm value in Nigeria using more than one- year period. This is because there are few recent studies on board diversity and political connections in Nigeria and the studies were crossectional. This study examines the effect of board diversity and political connections on value of listed financial service companies which includes deposit money banks, microfinance banks, insurance companies, mortgage banks and other companies in Nigeria. 2. Review of Literature and Theoretical Underpinning Firm valuation is a monetary measure of how the public views the business as a whole. That is the sum of all statements raised by investors. The list includes protected and unsecured creditors, as well as preferred and common equity investors. It is a term that is used to describe an entity's total worth overall rather than just the actual market capitalization. It’s a series of statements from borrowers and investors (Kiharo&Kariuki, 2018). The market valuation of a corporation is measured by the combined value of its properties, which represents the collective wealth of investors, lenders, and owners (Awan, Lodhi, &Hussain, 2018). Tobin's Q is one of the most often used financial measurements for determining a firm's value. It is a market return measure that compares the assessed worth of a firm by financial markets to the value of its assets. James Tobin developed the Tobin’s q ratio after hypothesizing that the aggregate market valuation of all publicly traded firms must be nearly equivalent to their replacement costs. Tobin’s Q ratio is computed by dividing the market value of equity by the book value of the total assets (Tobin, 1969). Diversity on the board involves having members from diverse ethnic groups, languages, educational backgrounds, gender, skills, and experiences together to preside over a variety of important issues (Abubakar, 2018). Board Gender Diversity and Firm Value Board gender diversity was described by Khan and Subhan (2019) as the overall number of female representatives on the board. According to Mintah and Schadewitz (2018), board gender diversity is described as the appointing committee nominating males and females to the corporate board of directors with the goal of combining diverse perspectives and increasing a firm’s valuation. The following studies were undertaken on the effect of board gender diversity and firm value: Salem, Metawe, Youssef, and Mohamed (2019) evaluated the qualities of the board of directors and firm value in Egypt and the United States.Variables like Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 80 CEO duality, board freedom, board size, board meetings, and board gender diversity were studied between 2012 and 2017. A total of 84 Egyptian listed companies and 30 American companies were chosen for the report. Secondary data was gathered from sampled firms’ annual reports and accounts and evaluated using multiple regression analysis. Gender diversity on boards is linked to firm value in both nations, according to the survey. However, since the study was not conducted in Nigeria, a local replication is needed.Contrary to the above study, Tarigan, Hervindra and Hatane (2018) examined the impact of board diversity and financial results using Tobin’s q as a metric of financial progress. Gender diversity, racial diversity, and educational diversity are among the study’s factors. The study’s sample consists of 525 firms that were quoted on the Indonesian stock exchange within the period of 2011 to 2015. Secondary data was collected from the sampled firms’ financial accounts and analyzed using regression analysis. According to the study, gender diversity has a negative effect on Tobin’s q. The study, however, is not Nigerian; therefore, a local replication is needed. Based on theoretical stand, the study formulated the following hypothesis: H0: Board gender diversity has no significant relationship with firm value Nationality of the Board of Directors and the Firm's Value According to Khan and Subhan (2019), board nationality is described as having representatives from various countries on the board of directors. Board nationality is defined as the proportion of foreigners on the board as a percentage of the total number of board members (Okoro, Onodugo, Udoh, &Chukwu 2019). Studies conducted on board nationality and firm value include: Woschkowiak (2018) examined board diversity and company success in Europe using Tobin’s q as a performance metric. The variables studied were gender diversity, nationality diversity and age diversity. All European firms traded on the European stock market in 2016 are included in the study’s sample. Secondary data was gathered from the reported entities' annual reports and evaluated using regression analysis. The findings show that nationality diversity increases the mentioned firms’ Tobin’s q substantially. The analysis, however, is not Nigerian and it is a cross-sectional one. Therefore, there is a need to repeat this study in Nigeria using panel data analysis. However, contrary to the above study, Charles et al., (2018) looked at the composition of corporate boards and their success in Nigerian deposit money banks using Tobin’s q as a metric for performance. The analysis used 14 Nigerian classified banks as a sample. Gender equity on the executive, board composition, international directorship and ethnic diversity were also investigated. The fixed effect Generalized Least Square Regression was used to study the impact of board Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 81 diversity on bank results from 2011 to 2015.The result shows that including an international director on the board has a detrimental effect on Tobin’s q. The analysis, based on theoretical stand, the study formulated the following hypothesis: H0: Board of director nationality has no significant relationship with firm value Board Ethnic Diversity and Firm Value Board ethnic diversity, according to Joyce (2017), applies to members of a board that come from a variety of ethnic backgrounds. Egwakhe, Akpa, and Ajayi (2019) define ethnic diversity as the amount, measure or presence of a race, ethnic, or socio-cultural community on a board in relation to the total number of directors on the board at any particular time. Studies conducted on board ethnic diversity and firm value includes: Chuah and Hooy (2018) researched the effect of board ethnic diversity on company performance in Malaysia, using Tobin’s q as a metric for firm performance. The sample of the research consists of 260 publicly traded firms in Malaysia from 2010 to 2012. Secondary data was collected from the listed companies' annual reports and analyzed via regression analysis. According to the findings, ethnic diversity on the board has a favorable impact on Tobin’s q. This research however, is not Nigerian research; therefore, a Nigerian replication is needed. Contrary to the above study, Ilogho (2017) investigated the impact of board nationality and ethnic diversity on the financial performance of Nigerian listed companies. The research used Tobin’s q as a metric of financial performance. The sample of the research includes 60 non-financial companies traded on the Nigerian stock market between 2012 and 2015. Secondary data was acquired from the sampled firms' annual reports and analyzed using OLS regression. The findings reveal that ethnic diversity has no bearing on the sampled firms Tobin’s q. However, the financial sector was excluded from the sample and just two variables of board diversity were examined in the study. Based on theoretical stand, the study formulated the following hypothesis: H0: Board ethnic diversity has no significant relationship with firm value Political Connections and Firm Value The board of directors is politically affected when a member or members of the board of directors occupy a political role, whether by referendum or nomination (Urhoghide & Omolaye, 2017). A board that is politically motivated has a chairman that is a present or former government political appointee, as well as military or ex- military personnel on it (Osazuwa, Ahmad, & Che-adam, 2016). Studies conducted on political connections and firm value include: Chung, Byun, and Young (2019) studied corporate political ties and companies’ value. The sample of the study Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 82 includes 93 Korean firms traded on the Korean stock market from 1998 to 2013. The research used the regression method of data analysis. According to the research, political connections have a favorable and considerable impact on the value of the firm. However, the study is foreign and therefore cannot be used in a Nigerian context. Contrary to the above study, Berkman and Galpoththage (2016) investigated political connections and firm value. The study’s sample consists of 99 publicly traded companies from 2006 to 2011. Secondary data was gathered from listed companies’ annual reports and analyzed using regression analysis. The findings reveal that a firm's worth is unaffected by political connections. The research, however, was carried out in Sri Lanka; therefore, a Nigerian replication is needed. Based on theoretical stand, the study formulated the following hypothesis: H0: Political connections has no significant relationship with firm value Theoretical Underpinning The resource dependency theory is the theory underpinning this research. Jeffrey Pfeffer and Gerald Salanick created the resource dependency theory in the 1970s. Pfeffer and Salanick (1978) argued that businesses operate in an open system in which they must exchange or acquire certain resources in order to survive, making them reliant on external units in their environment. This theory explains how critical it is for the board of directors of a company to connect to the outside world, because boards of directors’ serve as suppliers of resources that are lacking internally. Organizations benefit from boards of directors because they provide advice, counsel, and information channels, as well as access to resources. Firms are increasingly faced with a complex and uncertain macro environment, necessitating leadership from a diverse group of individuals who can provide a diverse range of resources compatible with modern business culture. As a result, resource dependency theory explains the link that exists between board diversity and the value of the firm by concluding that the best-performing management teams should include members with diverse ethnicity, nationality, and gender. Similarly, Hermalin and Weisbach (2001) agree with resource dependence theorists, arguing that board members gender, nationality, and ethnicity are valuable resources for guiding and improving the firm's value. Boards with a diverse ethnicity, gender and nationality according to Thomsen and Conyon (2012), have a diverse range of knowledge and skills. Diverse boards assist directors in gaining a better understanding of markets, customers, workers, and business opportunities. This leads to a greater grasp of business situations, which raises the Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 83 company’s value. Moreover, having female board of directors will also help the firm connect with important external elements. Female directors on boards creates a positive image for companies which can assist organizations garner support from key stakeholders including suppliers, customers, and investors as well as gain access to valuable resources (Knippen, Shen, & Zhu, 2019). Unlike male directors, Joyce (2017) contends that female directors bring to their boards unique and valuable resources and relationships. According to Ruigrok, Peck and Tacheva (2007), as business becomes more internationalized, there will be higher demand for directors with the necessary skills and connections in international markets. A foreign director in this situation may be competent and capable of connecting the organization to various contexts in the countries where it operates. In addition, according to resource dependence theory, gender and ethnicity disparities are likely to create specific knowledge sets that may be accessible to management for improved decision making, thereby increasing the firm's value. According to Pfeffer and Salancik (1978), companies aim to establish connections with political actors in order to minimize reliance on limited resources managed by other parties. Political sway, according to this theory, is an important tool for dealing with environmental uncertainties. This effect can be seen in the government's incorporation of directors or their engagement in political parties. In accordance with organizational standards; the directors serve as resource suppliers. Political clout will make it easier for a corporation to obtain capital such as loans, contracts, and government funding, boosting the company’s efficiency and value. 3. Methodology The study used a correlational research design to look into the effect of board diversity and political connections on firm value. The study’s population consists of all the fifty-one (51) financial service organizations that are listed on the Nigerian stock market (NSE) as at 31st December 2020. However, a sample of thirty five (35) organizations was arrived at after filtering out firms that did not have sufficient data for the period under study (2012-2020). (See appendix). The study used secondary data from annual reports of Nigeria's publicly traded financial services organizations. Panel data regression technique was used to estimate the link between the explained and explanatory variables. Fixed effect and random effect options were explored to address the panel effect of the data. Hausman specification test was also conducted to decide between fixed effect and random effect. In addition, robustness tests of multicollinearity and heteroskedasticity were also conducted. Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 84 Model Specification In order to examine the factors that have effect on firm value, a multiple linear regression model is established. The model accounts for the effect of board gender diversity, board nationality, board ethnic diversity and political connections on firm value. In order to maintain consistency with previous studies, a control variable of firm size was added to the regression analysis. Firm size was used as a control variable because of the general notion that larger firms have more competitive advantages and benefit from economies of scale. This variable was chosen as a control variable based on the findings of Lee-kuen, Sok-gee, and Zainudin (2017), where they discovered a substantial association between firm size and firm value. The model is stated below: Tobin’s Q it = β 0 + β1BGED it + β2BNAit + β3BETHDit + β4PCONit + β5FSIZEit + εit… Where: Tobin’s Q = Firm Value BGED = Board Gender Diversity BNA = Board Nationality BETHD = Board Ethnic Diversity PCON = Political Connection FSIZE = Firm Size ε = Error term t = Time i = Firm β0 is the Intercept, β1,- β5 are the coefficients of the variables Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 85 Variables Definition and Measurement Table 3.1: Variables Measurement S/N Variables Measurement Source 1. Tobin’s Q The ratio of a company’s market value of equity to itsentire assets book value. Nguyen (2016). 2. Board Gender Diversity Female directors as a percentage of total board members. Siantar (2016). 3. Board Nationality Foreigners on the board as a percentage of the overall number of board members. Okoro et al., (2019). 4. Board Ethnic Diversity If the board is made up of both northern and southern Nigerians, the value will be 1; otherwise, it will be 0. Charles et al., (2018). 5. Political Connection If political connection exists, the value will be 1; otherwise, it will be 0. Osazuwa et al., (2016). 6. Size Natural Logarithm of Total Asset Lee-kuen et al., (2017). Source: Compiled by Author, 2023 4. Results and Discussion of Findings The descriptive statistics, correlation matrix, and regression results on the relationship between board gender diversity, board nationality, board ethnic diversity, and political connection as explanatory variables, with firm value measured by Tobin's q as the explained variable are presented in this section. Table 4.1: Descriptive Statistics Results Variables Obs Mean Std.Dev. Min Max TOBIN’S Q 315 0.435 0.717 0.014 6.901 BGD 315 0.175 0.131 0 0.667 BNA 315 0.087 0.157 0 0.714 BETHD 315 0.819 0.386 0 1 PCON 315 0.749 0.434 0 1 SIZE (Million) 315 680,095 1,426,243 382 7,689,028 Source: STATA Output (2023) Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 86 The average Tobin's q is 0.44, with a standard deviation of 0.72, as shown in Table 4.1. This indicates that firm valuation varies widely among Nigeria's publicly traded financial services organizations. Tobin's q has a minimum and maximum value of 0.01 and 6.90, respectively. This implies that the lowest Tobin’s q value across the listed financial service firms was 0.01 and the highest Tobin’s q value was 6.90. Board gender diversity (BGD), on the other hand, has a mean value of about 18% with a standard deviation of about 13%. The average value of 18% indicates that women made up 18% of the directors of Nigeria’s publicly traded financial services firms. The standard deviation of 13% indicates that there is a little variation in gender diversity among Nigeria’s publicly traded financial service firms. Board Gender Diversity has a minimum and maximum value of 0 and 67% respectively. This indicates that some listed financial service firms in Nigeria did not have any female directors on their boards, while others had as high as 67% of female directors on their boards. Additionally, board nationality (BNA) has a mean value of approximately 9%, which implies that only 9% of directors on average are foreigners. The standard deviation of 16% also indicates a low variation in board nationality across Nigeria’s publicly traded financial services firms. Board nationality has a minimum and maximum value of 0 and 71% respectively. This result indicates that some listed financial service firms did not have any foreigners on their boards, while others had as many as 71% of foreigners on their boards.Board ethnic diversity (BETHD) has an average of approximately 82%, which indicates that 82% of listed financial service firms in Nigeria have both northerners and southerners present on their boards. The standard deviation of approximately 39% indicates a high variation in ethnic diversity across Nigeria’s publicly traded financial service firms. Board ethnic diversity has a minimum and maximum value of 0 and 1 respectively. Political connection (PCON) has an average value of 75% with a standard deviation of 43%, which also indicates a high variation in political connection across Nigeria’s publicly traded financial service firms. The result indicates that, on average, 75% of listed financial services firms in Nigeria have directors with political connections. Political connections have a minimum and maximum value of 0 and 1 respectively. Lastly, firm size has an average of 680 billion naira and a standard deviation of 1.4 trillion naira, which indicates a high variation in the values of total assets across Nigeria’s publicly traded financial service firms. Firm size has a minimum and maximum value of 382 million naira and 7.6trillion naira respectively. Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 87 Table 4.2: Correlation Matrix Results VARIABLES TOBIN’S Q BGD BNA BETHD PCON FSIZE TOBIN’S Q 1.000 BGD 0.008 1.000 0.884 BNA 0.140* -0.158* 1.000 0.013 0.005 BETHD 0.056 -0.084 -0.107 1.000 0.324 0.139 0.058 PCON -0.060 0.086 -0.220* 0.166* 1.000 0.291 0.128 0.000 0.003 FSIZE -0.319* 0.293* -0.021 0.184* 0.189* 1.000 0.000 0.000 0.705 0.001 0.001 * shows significance at the .05 level Source: STATA Output (2023) The correlation matrix of the dependent and independent variables is shown in Table 4.2 above. The result shows that board gender diversity has a correlation coefficient of 0.008, indicating that board gender has a positive link with the firm value of Nigeria's listed financial service firms. This implies that board gender diversity and firm value move in the same direction. Board nationality has a correlation coefficient of 0.140 as shown in the correlation matrix table above. This implies that board nationality has a positive relationship with the firm value of listed financial service firms in Nigeria. Board ethnic diversity has a correlation coefficient of 0.056 as shown in the correlation matrix table above. This implies that there is a positive link between board ethnic diversity and firm value of Nigeria’s publicly traded financial service firms. Table 4.2 shows that political connection has a correlation coefficient of-0.060, which means political connection has a negative link with the firm value of Nigeria’s publicly traded financial service firms. This implies that political connection and firm value move in opposite directions, and an increase in political connection will result to a decrease in the firm value of Nigeria’s publicly traded financial service firms. More so, the correlation coefficient of firm size has a value of -0.319. This implies that a negative relationship exists between firm size and firm value of listed financial service firms in Nigeria. This relationship indicates that both variables are moving in the inverse direction. There is no evidence of possible multicollinearity among the explanatory variables, according to the correlation matrix table. This is because as shown in table 4.2, all the correlation coefficients among the explanatory variables are less than 0.80 as propounded by Gujarati (2004). Therefore, there is no possible presence of multicollinearity among the independent variables. Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 88 Table 4.3 Robustness Tests Tests Chi-square value p-value Hettest 48008.50 0.0000 Hausman test 10.938 0.053 LM test 462.44 0.0000 Source: STATA Output (2023) The Modified Wald test was used to test for the presence of heteroskedasticity. The chi-square value was 48008.50, with a p-value of 0.0000, indicating that the result was significant. This indicates that there is presence of heteroskedasticity. The research carried out multicollinearity test to show the strength of the relationship among the explanatory variables themselves. The variance inflation factor (VIF) test was conducted, and all the variables have values less than 10 and tolerance values more than 0.10. (Rule of thumb). This demonstrates that there is no issue with multicollinearity. To decide between the fixed and random effect models, Hausman specification test was conducted. The Hausman specification test was insignificant with a chi square value of 10.938 and a p-value of 0.053 which was in favor of the random effect model. However, the Breusch and Pagan Lagrangian multiplier test for random effects was carried out in order to select between the random effect regression and the pooled ordinary least square (OLS) regression. The findings showed a chi-square value of 462.44 and a p-value of 0.0000, which is significant. This indicates that the random effect should be selected. However, the presence of heteroskedasticity made the researcher run and interpret further feasible generalized least square (FGLS) regression. Table 4.4 Feasible Generalized Least Square Regression Result TOBIN’S Q Coef. St.Err. T- value P- value Sig BGD 0.899 0.303 2.97 0.003 *** BNA 0.809 0.245 3.30 0.001 *** BETHD 0.296 0.100 2.95 0.003 *** BPCON 0.023 0.090 0.25 0.800 FSIZE -0.121 0.017 -7.05 0.000 *** Constant 2.958 0.401 7.38 0.000 *** Number of obs 315 Chi-square 60.229 Prob> chi2 0.000 ***p<0.01, **p<0.05, *p<0.1 Source: STATA Output, 2023 Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 89 The fitness of the model of the study as revealed in table 4.4 shows a chi-square value of 60.229 which is significant at 1%. This led to the robustness of the result and subsequent discussions that followed: Table 4.3 reveals that gender diversity on the board has a coefficient of 0.899 and a p-value of 0.003, which is statistically significant at 1%. The findings show that gender diversity on corporate boards has a positive and significant impact on firm value. By implication, it means an increase in board gender diversity will contribute to a rise in the firm value of Nigeria’s publicly traded financial service firms. This is because positive female participation among corporate directors strengthens corporate reputation and raises the company’s worth. The null hypothesis which states that board gender diversity has no significant effect on firm value of listed financial service firms in Nigeria is thus rejected. This research agrees with the study of Salem et al., (2019), however, it disagrees the study of Tarigan et al., (2018). The result in table 4.3 shows board nationality has a coefficient of 0.809 with a p- value of 0.001 which is statistically significant at 1%. The findings suggest that board nationality has a favorable and considerable impact on firm value. By implication, it means that adding more foreign directors to the board of Nigeria’s publicly traded financial service firms will enhance the firm value. This is because foreign directors bring valuable and diverse experience to the table that local board members lack, and their presence on the board helps to persuade international investors that the company is acting in their best interests. This provides evidence for rejecting the null hypothesis, which states that board nationality has no significant effect on the firm value of listed financial service firms in Nigeria. This study supports the research of Woschkowiak (2018) and contradicts the study of Charles et al. (2018). In addition, table 4.3 shows that board ethnic diversity has a coefficient of 0.296 with a p-value of 0.003 which is statistically significant at 1%. The findings show that ethnic diversity on the board of directors has a favorable and significant impact on the firm value. By implication, this means that an increase in the mix of northerners and southerners on the board of directors will lead to a rise in the firm value of Nigeria’s listed financial service firms. This can be possible because people from various ethnic backgrounds are more inclined to approach challenges in distinctive ways, encouraging the board to explore a larger variety of options and strategies when it comes to addressing organizational issues. This provides evidence for rejecting the null hypothesis, which states that board ethnic diversity has no significant effect on firm value of listed financial service firms in Nigeria. Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 90 The findings are consistent is with Chuah and Hooy (2018) but not in line with Ilogho (2017). Furthermore, from table 4.3, political connection has a coefficient of 0.023 with a p-value of 0.800, which is insignificant. The result shows that the positive link between political connection and firm value is insignificant. The study, however, fails to reject the null hypothesis, which states that political connections have no significant effect on the firm value of Nigeria’s listed financial service firms. The findings are in line with that of Berkman and Galpoththage (2016) but contradict Chung et al., (2019), who showed a substantial relationship between political connection and firm value. 5. Recommendation and Conclusion The research looked into the effect of board diversity and political connections on firm value of listed financial service firms in Nigeria. Based on the findings, the research concludes that board gender diversity, board nationality, and board ethnic diversity have significant effects on the firm value of Nigeria’s listed financial service firms, while political connections do not have a significant effect on the firm value of listed financial service firms in Nigeria. According to the findings, the research recommends that females should be considered for directorship positions in order to boost the firm's value in line with the resource dependency theory proposition; they should also look at the possibility of board mixture with foreign directors, as their presence on the board could likely attract foreign investors to the firm; and Lastly, the board of directors should consist of a mix of both northerners and southerners in Nigeria. This is logical, because an ethnically diverse board would have a lot of synergy and its decisions are expected to have a bearing on all ethnic groups across the country. Also, ethnic diversity helps to create a higher degree of corporate governance and hereby increase the firm value. Gusau Journal of Accounting and Finance, Vol. 4, Issue 1, April, 2023 91 References Abubakar, A. (2018). Corporate Board Diversity and Financial Performance : Panel Data Evidence from Quoted Deposit Money Banks in Nigeria. 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