Correlates of Board Diversity Attributes and Profitability of Listed Foods and Beverages Firms in Nigeria
DOI:
https://doi.org/10.52962/ipjaf.2024.8.3.156Keywords:
board diversity, profitability, food firms, NigeriaAbstract
Abstract
The failure of world big corporate firms has become major issues and subject of debates among accountants and the practitioners in the last decades. The problem has been attributed to poor corporate governance. Therefore the current study assessed the board diversity attributes the relationship with profitability of listed foods and beverages manufacturing firms in Nigeria. The study adopts Ex-post-facto and descriptive research designs to focus on foods and beverages manufacturing firms listed on the Nigerian Exchange Group (NGX). Out of the twenty two (22) foods and beverages manufacturing firms listed on the (NGX) ten (10) of them were selected using homogeneous purposive sampling technique. Principal components Analysis (PCA) was used to evaluate the significant board diversity attributes. The relationship between board diversity attribute and profitability of listed foods and beverages manufacturing firms in Nigeria was analyzed using Pearson Product Moment Correlation Coefficient (PPMCC). The results of PCA showed that Financial Expertise Diversity (60.78%) has the highest positive loading in Principal Component (PC)1, meaning it is the most dominant factor, while CEO Duality (-58.95%) has a strong negative loading in PC1, suggesting an inverse relationship between these two attributes. In PC2, Gender Diversity (60.02%) and Ethnicity Diversity (59.1%) have the highest positive loadings, indicating that demographic diversity is a central component of board diversity for the firms studied. Meanwhile, Educational Background Diversity (73.48%) heavily influences PC3, suggesting that the diversity in educational qualifications among board members contributes uniquely to overall board diversity. Further, the results of correlation matrix revealed that greater board diversity, especially gender (0.683771), ethnicity (0.739114), and education back ground (0.833936) tends to be associated with better financial outcomes measured by return on asset (ROA) for sampled firms. The study concluded that there exists a significant variation in the board diversity attributes: gender diversity, educational diversity ethnicity diversity, and financial expertise and CEO Duality and they exert relationship with the profitability of listed foods and beverages manufacturing firms in Nigeria
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