CORPORATE GOVERNANCE ATTRIBUTES AND FINANCIAL STATEMENT FRAUD IN DEPOSIT MONEY BANKS IN NIGERIA

ABSTRACT

The study examined the effect of corporate governance attributes on financial statement fraud among deposit money banks that are listed on Nigeria Exchange Limited. The scope of the study covers corporate governance attributes such as board size, audit committee effectiveness and board gender diversity. The dependent variable (Financial statement fraud) was measured with beneish M-score. The study adopted an ex-post facto research design and employed secondary data from 2012 to 2021 on the research variables sourced from the annual reports of 13 banks listed on the floor of the Nigerian Exchange. The logistic regression was employed as the method of data analysis in the study. The findings revealed amongst others that board size has a significant positive effect on financial statement fraud in Nigerian quoted banks. The findings further show that board gender diversity is negatively related to financial statement fraud in quoted Nigerian banks but the effect is not significant. Finally, audit committee effectiveness was found to have a negative and significant effect on financial statement fraud in Nigerian quoted banks. It was concluded that gender diversity and audit committee effectiveness reduce the likelihood of financial statement fraud, however, board size was found to reinforce financial statement fraud in quoted Nigerian banks. The study recommends that since the significant negative nature of audit committee effectiveness show that four attributes jointly account for effectiveness, banks are encouraged to establish audit committees with joint attributes to be able to reduce the likelihood of financial statement fraud in quoted Nigerian banks. The study also recommends that boards should be properly diversified, so as to allow for varied decisions, and the use of smaller boards to be introduced to allow for promptness of board members, especially as large board size have been found to reinforce the likelihood of financial statement fraud of quoted Nigerian banks.