CORPORATE GOVERNANCE AND SUSTAINABILITY REPORTING IN NIGERIA.

ABSTRACT

The broad objective of this study is to investigate the effect of corporate governance mechanism on sustainability reporting quality of listed manufacturing firms in Nigeria using a five (5) year time frame that span through 2018 to 2022. To achieve this objective, the researcher selected specific corporate governance mechanism proxies which have been widely employed in related extant literature to ascertain the extent to which board size, board independence, board diversity, managerial membership, and audit committee affects sustainability reporting. This study employed ex-post facto and descriptive research design on a panel data set sourced from annual financial reports of listed manufacturing firms in Nigeria. Further, mixed effect regression analysis technique was employed to test the formulated hypotheses after fulfilling the necessary conditions for obtaining non-spurious regression estimates. Specifically, the result reveals mixed evidence suggesting that the effect of corporate governance on sustainability reporting depends specifically on the proxy/s employed. Particularly, the findings reveal that while board size positively affect sustainability reporting quality which is consistent with the agency theory. However, board independence, board diversity, managerial ownership, and audit committee showed no statistically significant effect on sustainability reporting during the period under review. Therefore, based on these empirical outcomes, the study recommends among others that policymakers should consider strengthening corporate governance regulations and codes to encourage the presence of larger boards among listed manufacturing firms in Nigeria. This can be achieved by reviewing and updating existing governance guidelines to emphasize the importance of board size in enhancing sustainability reporting quality. Additionally, consider providing incentives for firms that voluntarily maintain large, diverse boards.