Does the Presence of Ethnic and Gender Diverse Directorships Impact Firm Performance? A Multisector Study of Board Diversity in Nigeria

In particular, in Nigerian industries, this study examines the connection between board features and firm performance. We look at the financial justification for including women, ethnic minorities, and independent committee members on the board and how they affect the firm’s financial performance. We therefore employ data from 190 firms on the Nigerian Stock Exchange in two key sectors (banking and oil and gas). We specifically looked into the association between the number of female directors, the number of ethnic minority directors (Yoruba, Igbo, and Hausa) on corporate boards, independent committee membership, and financial performance measured in Return on Assets and Tobin’s Q while controlling for numerous corporate governance mechanisms. We find a positive and significant relationship between ethnicity and firm performance. We also find a significant relationship between gender, independent committee membership, and financial performance. The result of our analysis supports the business case for the inclusion of women on corporate boards. This focuses attention on the discourse surrounding human resource management in the context of a developing nation such as Nigeria, which theoretically calls for a more integrated application of corporate governance thinking centred on agency, stewardship, and resource dependence theories to help explain how governance functions in emerging/developing economies.