INVESTIGATING BOARD SIZE AS A DETERMINANT OF RISK DISCLOSUREBY DEPOSIT MONEY BANKS IN NIGERIA

Abstract

The purpose of the paper is to investigate the relationship between board size and risk disclosure in the Nigerian context. Considering the 14 deposit money banks listed on the stock exchange, a Partial least squares- structural equation model was run to examine the influence of board size on the extent of risk disclosure measured through an index based on the information disclosed in their annual reports. Findings from the analysis revealed that board size has a significant relationship with the risk disclosure of deposit money banks in Nigeria. The possible explanation for such a situation could be the fact that as some of the members of the board are outsiders, they would want the banks to disclose their risk related information so that they can properly partake in the decision making process of the organisation when the time comes. The implication of this finding in the banking sector is that, board size is important in determining the level of risk disclosure of Deposit money banks in Nigeria. It is therefore recommended that policy makers should ensure that the number of members of a board be increased from the normal minimum of five (5) to nine (9) as such larger boards lead to diversity that would assist firms in safeguarding their resources and as well, lessen the uncertainties in their operating environment and ensure effective management decision including effective risk disclosure.