2024, Vol. 7, Issue 2

author(s)
Urhuemu Paul Gelor, Edirin Jeroh and Frank O Ebiaghan

abstract
The study evaluated how grey directors’ dominance in corporate boards may possibly influence financial statements’ reliability. The sample consists of thirty (30) companies listed in the financial services sector of the Nigerian Exchange Group (NGX) and covered a period of eleven (11) financial years (2012 -2022). Financial statements’ reliability was measured with reference to the occurrence of restatements of financial reports while the proportion of the company’s equity shares owned by grey directors was used as proxy for grey directors’ dominance. A balanced panel data was obtained and analysed using descriptive statistics, a correlation matrix, whereas, the formulated hypothesis was tested using the binary logit regression technique. The overall result showed that at 5% level of confidence, the level of dominance of grey directors in corporate boards exerts significant negative influence on the occurrence of restatements of financial reports among financial service entities in Nigeria. The implication of the significant negative impact is that greater dominance of grey directors is associated with lesser likelihood of the occurrence of financial restatements; thus, implying high financial reporting quality which in turn will boost the level of reliability. The study therefore underscores the need for regulations that will promote the deliberate inclusion and/or retention of grey directors in the composition of corporate boards’ membership with the hope of enhancing efficiency of boards in the performance of their respective oversight functions, and by extension, reducing material misstatements which often triggers subsequent earnings restatements.