Corporate Governance and Financial Statement Fraud in Nigeria

ABSTRACT

The study examines the nature of relationship that exist between corporate governance and financial statement fraud in Nigeria. Specifically, it examines the relationship between board size, audit committee independence, board diversity, board independence and ownership structure with financial statement fraud in Nigeria. Panel data or longitudinal survey was adopted and secondary data were sourced from the audited annual financial reports and accounts of the thirty (30) deposit companies listed on the Nigerian Exchange Group as at 31st December, 2020. Ordinary Least Square regression (OLS) and the Beneish M-score model were used to analyse the data of the study. The results from the findings of the analyses showed that Board independence, board size, gender diversity on the board, audit committee independence, and firm ownership did not significantly affect financial statement fraud, indicating that they are not significant in determining the extent of financial statement fraud. Nonetheless, there is a notable correlation between the degree of financial statement fraud and board independence. This study suggests that corporate governance mechanisms do not have a significant role in the manifestation of financial statement fraud, based on its findings. Nonetheless, it is important to maintain the board of directors' independence. The caliber of the board's members in terms of experience and expertise has to be a top priority since it affects the business's effectiveness.