Likelihood of Financial Statement Fraud and Board Characteristics in Nigeria Quoted Companies

ABSTRACT

This study investigate the likelihood of financial statement fraud and board characteristics of Nigeria quoted companies. The study examines the influence of some board characteristics with regard to management efforts in curbing the likelihood of financial statement fraud in Nigeria quoted companies. Likelihood of financial statement fraud is proxy by Beinish M-score. This study used secondary data sourced from audited annual reports of quoted companies in the Nigeria Stock Exchange and a sample size of sixty-five (65) companies were used for a six-year period between 2012-2017.

The binary probit regression estimation analysis of the pooled data showed that board gender diversity have positive relationship with the likelihood of financial statement fraud in Nigeria quoted companies. Board size, board independence, and board efficacy were found not to havesignificant effect on the likelihood of financial statement fraud in Nigeria.

This study contributes to knowledge by extending literature on the influence of board characteristics on the likelihood of financial statement fraud in Nigeria and therefore recommend that board of directors should be constituted in such a way to have more positive effect on the organisation so as to reduce the circulation of fraudulent financial statements in Nigeria.