CORPORATE GOVERNANCE AND THE LIKELIHOOD OF FINANCIAL STATEMENT FRAUD IN NIGERIA

ABSTRACT

The objective of the study was to examine the relationship between corporate governance mechanism and the likelihood of financial statement fraud in quoted commercial banks in Nigeria. The methodology employed involved the collection of data from companies that were quoted in the banking sector on the floor of the Nigeria Stock Exchange. The longitudinal research deign was employed. The population consisted of 13 quoted companies in the banking sector of the Nigerian Stock Exchange for a period of 8 years (2018-2023). The data gathered was analysed using the pane; binary logit regression technique. The findings revealed that 1. Audit committee financial expertise has a significant negative relationship with the likelihood of financial statement fraud. Audit committee gender diversity has a significant positive relationship with the likelihood of financial statement fraud. Board independence has a significant negative relationship with the likelihood of financial statement fraud. Board size has a significant negative relationship with the likelihood of financial statement fraud. Institutional ownership has an insignificant negative relationship with the likelihood of financial statement fraud. It was therefore recommended that firms have a significant number of independent nonexecutive directors in adherence to the governance rule, firms are advised to go beyond the minimum of having one financial expert in the audit committee to combat the case of financial statement fraud. Also, firms are encouraged to maintain optimum number of directors on the board of directors to handle firm operations.