DIRECTOR’S CHARACTERISTICS AND FRAUDULENT FINANCIAL REPORTING IN NIGERIA
DIRECTOR’S CHARACTERISTICS AND FRAUDULENT FINANCIAL REPORTING IN NIGERIA

Summary/Abstract: This study examined the relationship between directors’ characteristics and fraudulent financial reporting for selected listed firms on the Nigerian Stock Exchange. To achieve the objectives, a sample size of 80 listed companies from the Nigerian Stock Exchange was selected. The study adopted an ex-post-facto research design. Secondary data were collected from the firms’ annual reports on their corporate websites, to determine the relationship between directors’ characteristics and fraudulent financial reporting for a period of seven years (2012-2018). The study utilised panel logit regression method to test the hypotheses. The study showed that directors’ political connection had a negative and an insignificant relationship with fraudulent financial reporting at p-values of 5% significance level (0.2640>0.05). The study found that director’s overconfidence exhibited a significant positive relationship with fraudulent financial reporting at p-value of 5% significant level (0.0000<0.05). The study found a negative and an insignificant relationship between directors’ financial expertise and fraudulent financial reporting at the p-value of 5% level of significance (0.4800>0.05). However, directors’ compensation revealed a significant negative relationship with fraudulent financial reporting at p-value of 5% significance level (0.0230 <0.05). The study found that directors’ ownership exhibited an insignificant negative relationship with fraudulent financial reporting at p-value of 5% significance level (0.3370>0.05). Based on these findings, the study concludes that directors’ characteristics significantly affects fraudulent financial reporting in Nigeria. The study recommended that more politically connected directors should be appointed to the board since a higher percentage of politically connected directors would report a significant negative relationship. In addition, the study also recommended that more directors with financial expertise should be appointed to the board, as it would help to significantly reduce the likelihood of fraudulent financial reporting.

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