MODERATING EFFECT OF RISK GOVERNANCE COMMITTEE BETWEEN BOARD INDEPENDENCE AND FINANCIAL PERFORMANCE AMONG NIGERIAN LISTED FINANCIAL INSTITUTIONS

Abstract

The risk governance committee establishes risk strategy, reviews risk reports and provides enterprise risk management advice to board members. Though research on board independence is has established the influence on firms’ financial performance, there are concerns as to its extent. This study examines the moderating role of risk governance committee on the relationship between board independence and financial performance of listed financial institutions in Nigeria for the period of 2016-2020. The population of the study comprised of 57 financial institutions listed on the Nigerian Stock Exchange as at December 2020 from which a sample of 47 firms was used. Multiple regression technique was employed for data analysis. The results show that board independence and risk governance committee have insignificant relationship with financial performance but significantly moderates the relationship between board independence and financial performance of listed financial institutions in Nigeria. The study recommends that financial institutions in Nigeria should strengthen risk governance committee and encourage more number of knowledgeable outside/independent directors. This is because the presence of a strong risk governance committee could improve the efficiency of the firm’s financial performance