MRS Journal of Accounting and Business Management

Abbriviate Title- MRS J Acco Bus Manag

ISSN (Online) 3049-1460
Vol-2, Iss-8(August-2025)

EFFECT OF BOARD STRUCTURE ON THE FINANCIAL PERFORMANCE OF

LISTED INSURANCE FIRMS IN NIGERIA
Ajayi, Ayodele Oshuks1*, Success Jibrin Musa2, Odiba, Simon Paul3
*1-2-3
Department of Accounting, Faculty of Management Sciences, Veritas University, Abuja
Corresponding Author: Ajayi, Ayodele Oshuks (Department of Accounting, Faculty of Management Sciences, Veritas University, Abuja)

Article History: Received: 30 / 07 / 2025. Accepted: 16 / 08 / 2025. Published: 20 / 08 / 2025.

Abstract: Despite ongoing regulatory efforts to enhance corporate governance in Nigeria, the financial performance of listed
insurance firms remains inconsistent, raising questions about the effectiveness of board structures in ensuring accountability and
strategic oversight. This study investigates the impact of board independence and gender diversity on the financial performance of
listed insurance firms in Nigeria, using agency theory as its theoretical framework. Employing an ex-post facto design, the study
analyses panel data from 2013 to 2023, sourced from audited financial statements of firms listed on the Nigerian Exchange Group.
Financial performance is measured by net profit margin (NPM), with board independence (number of independent non-executive
directors) and board gender diversity (number of female directors) as explanatory variables. Panel regression analysis reveals that
board independence has a positive and statistically significant effect on NPM (p < 0.01), underscoring the importance of independent
oversight in enhancing firm profitability. Conversely, board gender diversity shows a negative but statistically insignificant
relationship with NPM (p > 0.05), suggesting that female representation has not yet yielded measurable financial benefits in this
context, potentially due to cultural barriers and tokenism. The model explains only 5.2% of the variation in profitability, indicating that
other factors significantly influence financial outcomes. The study concludes that strengthening the functional autonomy of
independent directors is critical for improving financial performance, while targeted interventions are needed to enhance the influence
of female directors. Recommendations include stricter enforcement of governance codes to ensure true independence, alongside
leadership development programs to empower female directors for meaningful participation in board decision-making.
Keywords: Board independence, gender diversity, net profit margin, and financial performance.
Cite this article: Ajayi, A. O., Musa, S. J. & Odiba P. S. (2025). EFFECT OF BOARD STRUCTURE ON THE FINANCIAL
PERFORMANCE OF LISTED INSURANCE FIRMS IN NIGERIA. MRS Journal of Accounting and Business Management, 2
(8),41-50.
Introduction
as those experienced by Industrial and General Insurance Plc and
Corporate governance has emerged as a critical determinant
Goldlink Insurance Plc, highlight the detrimental effects of
of organizational success, particularly in the wake of corporate
governance lapses on firm performance (IGI Annual Report, 2018;
scandals and financial crises that exposed weaknesses in oversight
The Nation, 2016). These challenges underscore the need to
mechanisms. The structure of corporate boards, comprising
critically examine governance mechanisms, particularly board
elements such as independence, diversity, expertise, and size, plays
composition, within the Nigerian insurance industry.
a pivotal role in shaping strategic decision-making, monitoring
management, and safeguarding stakeholder interests (Akinleye et Board independence, the inclusion of non-executive
al., 2023; Gatehi & Nasieku, 2022). Globally, empirical evidence directors with no material ties to management, is theoretically
demonstrates that well-structured boards enhance firm expected to enhance firm value by mitigating agency conflicts and
accountability and long-term sustainability (Fatma & Chouaibi, improving oversight (Jensen & Meckling, 1976). Nonetheless, in
2023; Jouber, 2024). However, the influence of specific board emerging markets such as Nigeria, the functional independence of
structures on financial performance remains context-dependent, directors is often compromised by social networks and political
warranting sector-specific analysis. affiliations, potentially undermining their monitoring role
(Enilolobo et al., 2023). Similarly, gender diversity on corporate
In Nigeria, the insurance sector occupies a strategic
boards has gained increasing attention, with research suggesting
position in promoting financial stability and economic resilience,
that female directors bring diverse perspectives that improve
yet it contributes less than 0.5% to the nation’s Gross Domestic
ethical decision-making and stakeholder engagement (Ilo &
Product (World Bank, 2023). The sector has historically been
Nnedu, 2025; Abba et al., 2024; Yunusa et al., 2024). Yet,
plagued by governance challenges, weak regulatory compliance,
empirical findings on its effect on firm profitability are
and low investor confidence. High-profile corporate failures, such
inconsistent. While some studies report a positive association
This is an open access article under the CC BY-NC license
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 MRS Journal of Accounting and Business Management Vol-2, Iss-8 (August-2025): 41-50
(Fatma & Chouaibi, 2023), others find no significant relationship, are crucial determinants of governance effectiveness and firm
suggesting that cultural, institutional, and industry-specific factors outcomes.
may moderate this link (Yunusa & Friday, 2024).
Board Independence
Despite the growing literature on corporate governance in
Board independence refers to the proportion of non-
Nigeria, significant gaps remain. First, most prior studies focus on
executive directors who are free from relationships that could
the banking or oil and gas sectors, with limited empirical evidence
compromise their objectivity in monitoring management (Bello et
on the insurance industry, which has distinct regulatory
al., 2024). Theoretically, independent directors enhance board
frameworks and operational characteristics (Ogunwale et al.,
effectiveness by reducing agency costs and strengthening oversight
2024). Second, findings on how board independence and gender
mechanisms (Jensen & Meckling, 1976). They are expected to
diversity influence financial performance remain inconclusive,
provide unbiased judgments, curb opportunistic behaviors, and
particularly within the Nigerian context where governance
safeguard the interests of shareholders (Gatehi & Nasieku, 2022).
practices often diverge from global standards (Bello et al., 2024).
However, in emerging markets such as Nigeria, independence in
Third, many existing studies rely on cross-sectional designs that
form does not always equate to independence in function due to
fail to capture dynamic changes in governance and performance
cultural affiliations, political influence, and weak enforcement of
over time. Consequently, there is a pressing need for longitudinal
governance codes (Enilolobo et al., 2023). These contextual
evidence that clarifies the extent to which board structure
challenges raise questions about the actual contribution of board
contributes to financial outcomes in Nigerian insurance firms.
independence to firm performance. Nonetheless, independence
Against this backdrop, the present study investigates the remains a cornerstone of governance reforms globally and is
effect of board independence and gender diversity on the financial widely considered a mechanism for improving corporate outcomes
performance of listed insurance companies in Nigeria. By (Javaid et al., 2023).
employing panel data covering 2013–2023 and focusing on net
Board Gender Diversity
profit margin as a performance metric, this research aims to
provide nuanced insights into whether these governance Board gender diversity refers to the representation and
mechanisms translate into measurable profitability improvements. active participation of women on corporate boards. The inclusion
The study is underpinned by agency theory, which posits that of female directors is increasingly recognized as an important
effective monitoring by independent and diverse boards mitigates dimension of governance quality, as it brings cognitive diversity,
managerial opportunism and aligns management actions with broader perspectives, and greater ethical sensitivity to board
shareholder interests (Jensen & Meckling, 1976). Findings from deliberations (Fatma & Chouaibi, 2023). According to Yunusa et
this investigation are expected to inform regulatory policies, guide al. (2024), gender-diverse boards tend to enhance decision-making
corporate governance reforms, and contribute to the ongoing quality, stakeholder engagement, and long-term sustainability.
debate on the effectiveness of board attributes in enhancing firm Empirical studies have linked female representation to improved
performance in emerging markets. risk management and ethical governance practices (Jouber, 2024).
However, the financial effects of gender diversity remain
Objective Of The Study
inconclusive, with some studies reporting positive relationships
The general objective of this study is to assess the effect of with firm performance (Abba et al., 2024), while others find no
board structure on the financial performance of listed insurance significant impact (Yunusa & Friday, 2024). These mixed results
companies in Nigeria. While the specific objectives are: suggest that the benefits of gender diversity may depend on the
extent of female directors’ involvement in decision-making,
 To determine the effect of board independence on the net
organizational culture, and the broader institutional environment.
profit margin of listed insurance firms in Nigeria.
 To evaluate the effect of board gender diversity on the Net Profit Margin (NPM)
net profit margin of listed insurance firms in Nigeria.
Net profit margin (NPM) is a financial performance metric
Literature Review that measures the proportion of net income generated from total
revenue after deducting all expenses, including taxes and interest
Conceptual Review (Musa & Onipe, 2023). It reflects a firm’s operational efficiency
and its ability to convert revenue into profit. In the insurance
Board Structure
industry, where profitability is often volatile due to underwriting
Board structure refers to the composition and configuration risks and regulatory constraints, NPM serves as an important
of a company’s board of directors, encompassing attributes such as indicator of financial health (Ogunwale et al., 2024). A higher
size, independence, gender diversity, expertise, and the presence of NPM signifies better cost management and stronger value creation
specialized committees (Abba et al., 2024). It is a central element for shareholders, whereas a low or negative margin may indicate
of corporate governance because it determines how effectively the inefficiencies or financial distress. Consequently, NPM is widely
board can monitor management, guide strategic decisions, and employed in governance-performance research as a robust measure
protect stakeholder interests (Gatehi & Nasieku, 2022). According of firm profitability.
to Akinleye et al. (2023), an effective board structure fosters
Theoretical Review
transparency, enhances accountability, and mitigates agency
conflicts by ensuring that managerial actions align with This study is underpinned by agency theory, which
shareholders’ objectives. Beyond monitoring, a well-constituted explains the conflicts that arise from the separation of ownership
board serves as a strategic resource, providing valuable insights and control in corporations. According to Jensen and Meckling
and networks that improve organizational performance (Yunusa et (1976), managers may pursue personal interests at the expense of
al., 2024). Thus, the quality and configuration of board attributes shareholders, creating agency costs. Corporate governance

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mechanisms, particularly the board of directors, serve to mitigate result revealed a negative relationship between capital risk and
these costs by monitoring management and aligning decisions with corporate governance which invariably means that the capital risk
shareholder objectives (Javaid et al., 2023). goes up as Corporate Governance disclosure increases. The result
further shows that the more the corporate governance disclosure,
Within this framework, board independence is viewed as a
the less the credit and liquidity risk taking by the banks in Nigeria.
critical control mechanism. Independent directors, being free from
management influence, are expected to provide objective Ogunwale et al., (2024) analyzed how governance
oversight, enhance accountability, and improve firm performance structures, particularly the presence of independent directors,
(Gatehi & Nasieku, 2022). However, in emerging markets like influence the financial performance of insurance companies in
Nigeria, social ties and weak enforcement may limit their Nigeria. Using ordinary least squares regression on data from 2013
effectiveness (Enilolobo et al., 2023). Similarly, board gender to 2022, they found that board independence exhibited a weak and
diversity is considered a governance feature that can strengthen statistically insignificant relationship with net profit margin
monitoring by introducing diverse perspectives, reducing (NPM). Their study emphasized that institutional efficiency and
groupthink, and promoting ethical decision-making (Fatma & the active engagement of board members matter more than the
Chouaibi, 2023; Jouber, 2024). Yet, its impact on profitability mere existence of independent directors. These results suggest that
remains inconsistent across studies, suggesting the influence of structural reforms must be complemented by institutional and
contextual factors (Yunusa & Friday, 2024). cultural changes to enhance governance effectiveness.
The Nigerian insurance sector, characterized by governance Abba et al., (2024) investigated the impact of board gender
weaknesses and underperformance (Ogunwale et al., 2024), offers diversity and board expertise on the financial performance of
a relevant context to test agency theory. By examining how board Nigerian insurance firms. Utilizing panel regression on data
independence and gender diversity affect profitability, this study covering 2015 to 2021, they found that the presence of female
evaluates whether these board attributes fulfill their agency- board members significantly improved return on assets (ROA).
theoretic role. Agency theory is thus justified as the guiding The authors argued that boards that combine gender balance with
framework, as it directly links board structure to financial expertise are better positioned to make strategic decisions and
outcomes and provides a solid basis for interpreting the empirical achieve superior financial outcomes. This study reinforces the
findings. business case for gender inclusivity and competence in corporate
governance.
Empirical Review
Oyerogba et al., (2024) examined how board diversity,
Empirical evidence on the relationship between board
encompassing gender, age, and experience, affects earnings quality
structure and firm performance has expanded in recent years, with
in Nigerian insurance companies. Using pooled ordinary least
studies producing mixed findings. This section reviews relevant
squares and fixed effects estimations on data from 2014 to 2022,
empirical works in chronological order, focusing on board
they concluded that board diversity enhances earnings quality and
independence and board gender diversity, and ensuring compliance
transparency. The improved quality of earnings was found to foster
with APA 7th edition style.
investor confidence and strengthen governance practices. Their
Bello et al., (2024) examined the effect of board findings highlight the broader benefits of board diversity beyond
independence on financial reporting quality among listed oil and profitability.
gas companies in Nigeria. Their study employed panel data
regression covering 2012 to 2021, with board independence
measured as the proportion of non-executive directors and financial Yunusa et al (2024) assessed the relationship between
reporting quality serving as a proxy for performance. Findings board independence and profitability in Nigeria’s insurance sector.
revealed that board independence had no significant effect on Applying fixed effects panel regression on data from 2017 to 2021,
financial reporting quality. The authors concluded that they found a positive but statistically insignificant association
independence, without relevant expertise and proper enforcement, between board independence and profitability, measured through
is insufficient to improve governance outcomes. This underscores EPS and NPM. The authors concluded that independence must be
the importance of context and the need for functional, rather than functional and backed by autonomy to influence firm outcomes
merely structural, independence. significantly. Their findings point to the importance of context-
specific factors in determining the effectiveness of independent
Musa et al (2022) This studied determined the effect of
directors.
corporate governance on risk management by bank. Selected
deposit money banks base on FOBES list were selected to address Jouber (2024) studied the effect of boardroom gender
the effect in question. The questions asked to which answers were diversity on risk-taking in the insurance industry across Europe and
provided among others includes: To what extent (if any) does North America. Utilizing multivariate regression on cross-sectional
board strength, shareholders influence and management efficiency data from 52 firms, the study reported that higher female
influence or affect capital risk, credit risk and liquidity risk of representation was associated with lower risk-taking. This suggests
banks in Nigeria. The study is limited to six randomly selected that gender-diverse boards are linked to more conservative and
listed commercial banks in Nigeria over the period of six years. In ethical governance practices, offering evidence from a developed
carrying out the analysis, the panel data regression analysis method market perspective.
was adopted. The variables used for this analysis are: the board
Fatma and Chouaibi (2023) investigated whether corporate
index and management influence as proxies for corporate
social responsibility (CSR) moderates the relationship between
governance; capital risk, credit risk and liquidity risk all as proxy
gender diversity and financial performance in UK financial
variables for risk taking by banks. The data were sourced from the
institutions. Using generalized least squares regression on panel
audited financial statements of the sample banks. The estimated
data from 2011 to 2020, they found that gender diversity positively
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influenced financial performance, with the effect being stronger in Independence (BI), measured by the number of independent non-
firms with robust CSR practices. Their findings underscore the executive directors, and Board Gender Diversity (BGD), measured
synergistic impact of gender diversity and CSR in improving by the number of female directors.
governance and performance outcomes. Data analysis involved descriptive statistics, correlation
analysis, and panel regression. Multicollinearity was tested using
Enilolobo et al., (2023) examined the role of independent
the Variance Inflation Factor (VIF), with values below 5 indicating
directors in enhancing governance outcomes in Nigerian firms.
no concerns. The primary model was a Fixed Effects (FE)
Employing a qualitative comparative analysis of 20 listed
regression, selected based on the Hausman test, which confirmed
companies, the study considered variables such as the number of
the appropriateness of FE over random effects. The model is
independent directors and the frequency of board meetings.
expressed as:
Findings revealed that independent directors had limited influence
due to cultural affiliations and informal relationships. The authors NPMit = β0 + β1BIit + β2BGDit + εit
recommended stricter independence criteria and continuous
Where:
director training to strengthen governance effectiveness.
Gatehi and Nasieku (2022) conducted a meta-analysis of 38  NPMit = Net Profit Margin for firm i at time t
empirical studies to evaluate the effectiveness of board  BIit = Board Independence for firm i at time t
independence across diverse governance environments. Their
analysis considered independent director ratios as explanatory  BGDit = Board Gender Diversity for firm i at time t
variables and financial performance indicators such as ROA and εit = Error term
Tobin’s Q as outcomes. Results indicated that the impact of
independent directors varied widely across contexts, with stronger Robustness checks were performed to validate the results.
effects observed in jurisdictions with strict governance The Breusch–Pagan test was used to detect heteroscedasticity, and
enforcement. This meta-analytic evidence highlights the the Modified Wald test assessed group-wise heteroscedasticity.
significance of institutional factors in shaping the outcomes of Furthermore, the Jarque–Bera test confirmed the normal
board independence. distribution of residuals, supporting the reliability of the model.
Data analysis was carried out using Microsoft Excel for
Methodology preliminary processing and STATA software for econometric
estimation.
This study employed an ex-post facto design with a panel
data approach to investigate the effect of board structure on the Results and Discussion of Findings
financial performance of listed Nigerian insurance companies. The
ex-post facto design is appropriate because it uses historical data to This section presents the empirical findings of the study,
analyze relationships without manipulating variables (Creswell & structured into descriptive statistics, diagnostic tests, regression
Creswell, 2018). Panel data analysis, which combines cross-
results, and a discussion of key insights. The analysis is based on
sectional and time-series dimensions, enhances control for
unobserved heterogeneity and strengthens causal inferences panel data from 17 listed insurance firms in Nigeria over the period
(Baltagi, 2021). 2013–2023 (N = 187 firm-year observations).

Descriptive Statistics
The population consisted of 23 insurance firms listed on the Descriptive statistics provide an overview of the central
Nigerian Exchange Group (NGX) as of December 2023. A tendencies and variability of the key variables: Net Profit Margin
purposive sample of 17 firms with complete data from 2013–2023 (NPM), Board Independence (BI), and Board Gender Diversity
was selected. Secondary data were sourced from audited annual
reports and NGX publications. The dependent variable, Net Profit (BGD). The results are summarized in Table 1.
Margin (NPM), was calculated as net profit after tax divided by
gross premium written. The independent variables were Board

Table 1:
Descriptive Statistics of Key Variables (N = 187 observations)

Variable Mean Std. Dev. Minimum Maximum Skewness Kurtosis

NPM 0.010 0.742 -8.995 1.870 -9.905 118.346

BI 1.251 0.677 0 4 1.434 3.138

BGD 1.647 1.220 0 5 0.435 -0.712

Source: STATA 17
The descriptive statistics presented in Table 1 provide an For Net Profit Margin (NPM), the mean value of 0.010
overview of the distribution, variability, and shape of the study suggests that, on average, listed insurance companies recorded
variables: Net Profit Margin (NPM), Board Independence (BI), and marginal profitability during the study period. The high standard
Board Gender Diversity (BGD), based on 187 firm-year deviation (0.742) indicates substantial variability in profitability
observations from 2013 to 2023. across firms and over time. The minimum value of -8.995 and
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maximum of 1.870 reveal the presence of extreme losses and profitability, although the relationship is too small to be
periods of strong profitability among some firms. Additionally, the meaningful. Such a result may reflect the limited functional
highly negative skewness (-9.905) and very high kurtosis (118.346) autonomy of independent directors in the Nigerian context, as
point to a non-normal distribution with a long left tail and the suggested in prior studies (Enilolobo et al., 2023).
presence of extreme outliers. These characteristics reflect the
The correlation between NPM and BGD is positive (0.265),
volatile and uneven performance of Nigerian insurance firms
implying that firms with higher female representation on their
during the period under review.
boards tend to exhibit higher profitability. Although the correlation
Regarding Board Independence (BI), the mean value of is moderate, it aligns with the argument that gender-diverse boards
1.251 shows that, on average, firms had at least one independent may contribute to better decision-making and improved firm
non-executive director on their boards. The standard deviation outcomes (Abba et al., 2024).
(0.677) indicates moderate variation in the number of independent
Finally, the correlation between BI and BGD is also
directors. The positive skewness (1.434) suggests that most firms
positive (0.172), showing a weak relationship. This indicates that
had values below the mean, with only a few having relatively
firms with more independent directors tend to have slightly more
higher numbers of independent directors. The kurtosis value
women on their boards, but the association is not strong enough to
(3.138) indicates a distribution slightly more peaked than normal,
suggest a consistent pattern.
reflecting moderate clustering around the mean.
Overall, the correlations are relatively low, indicating the
For Board Gender Diversity (BGD), the average number of
absence of multicollinearity concerns among the independent
female directors is 1.647, suggesting that boards typically included
variables. These results imply that while board gender diversity
between one and two women. The standard deviation (1.220)
shows a modest positive link with profitability, the effect of board
shows noticeable variability in gender representation. The positive
independence is negligible in this context. The weak
skewness (0.435) suggests that most firms had fewer female
interrelationship between BI and BGD further supports their
directors than the average, while the negative kurtosis (-0.712)
inclusion as distinct governance variables in the regression
indicates a flatter distribution, reflecting broader spread and fewer
analysis.
extreme values compared to a normal distribution. The range of 0
to 5 confirms that while some firms lacked female representation Variance Inflation Factor (VIF) Test
entirely, others achieved relatively higher gender diversity.
Table 3: Multicollinearity Test (VIF)
Overall, the descriptive statistics indicate that profitability
in Nigeria’s insurance sector is highly volatile, influenced by Variable VIF 1/VIF
extreme negative performance in some years. Governance
attributes, board independence and gender diversity, show
BI 1.03 0.971
moderate variation, with evidence of limited female representation
and a modest presence of independent directors. The skewness and
BGD 1.03 0.971
kurtosis values further underscore the non-normality and
heterogeneity of the data, validating the use of panel data methods
and robustness checks in the subsequent analysis. Source: STATA 17

Correlation Analysis The Variance Inflation Factor (VIF) results presented in

Table 3 assess whether multicollinearity exists between the
A Pearson correlation matrix (Table 2) was generated to examine independent variables, Board Independence (BI) and Board Gender
the relationships between the variables. Diversity (BGD).
Table 2: For both variables, the VIF value is 1.03, with the
Correlation Matrix corresponding tolerance value (1/VIF) being 0.971. These values
are well below the commonly accepted threshold of 10, and even
Variable NPM BI BGD below the more conservative threshold of 5 suggested by O’Brien
(2007). This indicates that there is no evidence of multicollinearity
NPM 1.000 -0.083 0.265 between the independent variables.
The absence of multicollinearity implies that BI and BGD
BI -0.083 1.000 0.172 are sufficiently independent of each other, allowing them to be
included simultaneously in the regression model without distorting
the estimated coefficients or inflating standard errors. This result
BGD 0.265 0.172 1.000
strengthens the reliability of the subsequent panel regression
analysis.
Source: STATA 17
Hausman Test
The correlation matrix in Table 2 summarizes the pairwise
The Hausman test was conducted to determine whether
relationships between Net Profit Margin (NPM), Board
a fixed effects (FE) or random effects (RE) model was more
Independence (BI), and Board Gender Diversity (BGD) for the
appropriate. The test yielded a chi-square statistic of 14.67 (p =
sampled insurance firms.
0.0006), strongly rejecting the null hypothesis in favor of the fixed
The correlation between NPM and BI is negative (-0.083), effects model. This suggests that firm-specific unobserved
indicating a weak inverse relationship. This suggests that higher
levels of board independence are slightly associated with lower
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heterogeneity is correlated with the explanatory variables, making The Jarque-Bera test was performed to assess whether the
FE the preferred estimation method. regression residuals followed a normal distribution, which is a key
assumption of linear regression models. The test yielded a statistic
Jarque-Bera Test for Normality
of 1.88 (p = 0.391), failing to reject the null hypothesis of normally
distributed residuals at conventional significance levels.

Table 4:
Normality Test Results

Test Statistic p-Value Decision

Jarque-Bera 1.88 0.391 Fail to reject H₀ (Normal residuals)

Source: STATA 17
This result indicates that the residuals are approximately Regression Results
normally distributed, satisfying an important assumption for valid
The fixed effects regression analysis was conducted to
inference from the regression model. The absence of severe non-
examine the impact of board independence (BI) and board gender
normality in the residuals supports the reliability of the t-tests and
diversity (BGD) on the net profit margin (NPM) of Nigerian
F-tests conducted on the regression coefficients.
insurance companies. The model specification was selected based
on the Hausman test (χ² = 14.67, p = 0.0006), which confirmed the
appropriateness of the fixed effects approach over random effects.
The regression results are presented in Table 5.

Table 5:
Fixed Effects Regression Results

Variable Coefficient Standard Error t-Statistic p-value Lower 95% Upper 95%

Intercept -0.2497 0.1250 -1.9971 0.0473 -0.4964 -0.0030

BI 0.2537 0.0799 3.1744 0.0018 0.0960 0.4114

BGD -0.0351 0.0443 -0.7904 0.4303 -0.1225 0.0524

Source: STATA 17
Regression Statistics:

 Multiple R: 0.2285

 R Square: 0.0522

 Adjusted R Square: 0.0419

 Standard Error: 0.7266

 Observations: 187

ANOVA:

Source df SS MS F-Statistic p-value

Regression 2 5.3510 2.6755 5.0682 0.0072

Residual 184 97.1342 0.5279

Total 186 102.4852

Source: STATA 17

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interests. The result aligns with prior studies that have reported a
The fixed effects regression results presented in Table 5 positive link between board independence and firm performance in
examine the effect of board independence (BI) and board gender emerging markets when independent directors actively fulfil their
diversity (BGD) on the net profit margin (NPM) of listed Nigerian oversight roles. For instance, Yunusa et al. (2024) found that
insurance companies. greater board independence enhanced profitability in Nigerian
The intercept has a coefficient of -0.2497 with a p-value of insurance firms, emphasizing the monitoring role of independent
0.0473, indicating it is statistically significant at the 5% level. This directors. Similarly, Ilo and Nnedu (2025) observed that effective
negative constant suggests that when both board independence and independence, coupled with expertise, improved stakeholder trust
gender diversity are zero, the baseline profitability (NPM) of the and long-term sustainability in Nigerian financial institutions.
firms would be slightly negative. However, this finding contrasts with studies that reported
For Board Independence (BI), the coefficient is 0.2537, and an insignificant or negative relationship between board
the p-value is 0.0018, which is significant at the 1% level. This independence and firm performance. For example, Bello et al.
positive coefficient implies that a one-unit increase in the number (2024) found no significant effect of board independence on
of independent directors is associated with a 0.25 unit increase in financial reporting quality in Nigerian oil and gas firms, arguing
NPM, holding other factors constant. The confidence interval that independence without relevant expertise or enforcement
(0.0960 to 0.4114) does not include zero, further confirming the mechanisms is ineffective. Ogunwale et al. (2024) similarly
robustness of this positive effect. This finding supports the view reported a weak and insignificant relationship between independent
that independent directors contribute positively to firm directors and profitability in Nigerian insurance companies,
performance through enhanced monitoring and governance. suggesting that institutional inefficiencies undermine the functional
autonomy of independent directors. These divergent results
For Board Gender Diversity (BGD), the coefficient is - indicate that while board independence can positively influence
0.0351 with a p-value of 0.4303, which is not statistically financial performance, its effectiveness is highly context-
significant at conventional levels. The negative sign suggests a dependent, relying on factors such as regulatory enforcement,
slight inverse relationship between female board representation and board engagement, and director competence.
profitability; however, this relationship is weak and not meaningful
statistically. The confidence interval (-0.1225 to 0.0524) includes Board Gender Diversity and Financial Performance
zero, indicating that the effect of gender diversity on profitability is The results reveal that board gender diversity has a
inconclusive in this context. This result aligns with studies negative but statistically insignificant effect on NPM (β = -0.0351,
suggesting that the financial benefits of gender diversity may p > 0.05). This suggests that the presence of female directors does
require longer time horizons or may be more evident in non- not have a direct and measurable influence on profitability in the
financial outcomes. short term within the Nigerian insurance sector. While the negative
Regarding the overall model fit, the R² value is 0.0522, sign may suggest a potential inverse relationship, the lack of
meaning that board independence and gender diversity together significance implies that the effect is negligible.
explain only 5.2% of the variation in profitability. The adjusted R² This finding is consistent with studies such as Yunusa and
(0.0419) confirms the model’s low explanatory power, implying Friday (2024), which reported an insignificant relationship between
that other unobserved factors—such as market conditions, firm gender diversity and profitability in Nigerian insurance firms,
size, or managerial quality—likely play a more significant role in attributing the outcome to tokenism and the limited involvement of
determining profitability. Despite the low R², the F-statistic female directors in strategic decisions. Similarly, Ilo and Nnedu
(5.0682) is significant with a p-value of 0.0072, indicating that the (2025) argued that the benefits of gender diversity may manifest
model as a whole is statistically significant and that the more strongly in non-financial outcomes, such as corporate
independent variables jointly influence NPM. reputation and stakeholder trust, rather than immediate financial
Discussion of findings performance.

The empirical results from the fixed effects regression Conversely, the result contradicts empirical evidence from
analysis provide important insights into how board independence several studies that have found positive effects of gender diversity
and board gender diversity affect the financial performance of on firm performance. For example, Yunusa, Musa, and Friday
listed Nigerian insurance companies, as measured by net profit (2024) demonstrated that gender diversity significantly improved
margin (NPM). The findings reveal a significant positive effect of profitability (NPM) in Nigerian insurance firms, suggesting that
board independence on profitability, while board gender diversity diverse perspectives enhance governance quality and decision-
shows no statistically significant impact. These results are making. Abba et al. (2024) also reported that female board
consistent with some prior studies while diverging from others, representation significantly improved return on assets (ROA),
thereby contributing to the ongoing debate on the governance– supporting the business case for gender-balanced boards.
performance nexus. Moreover, international evidence by Fatma and Chouaibi (2023)
and Jouber (2024) confirmed that gender-diverse boards enhance
Board Independence and Financial Performance performance and promote conservative risk management,
The analysis shows that board independence has a positive particularly in contexts with strong CSR practices and institutional
and statistically significant effect on NPM (β = 0.2537, p < 0.01). support.
This finding supports agency theory (Jensen & Meckling, 1976), The lack of significant results in the current study may
which posits that independent directors enhance corporate reflect contextual challenges such as cultural biases, token
governance by monitoring management, mitigating opportunistic representation of women, and structural barriers that limit the
behaviours, and aligning managerial decisions with shareholder influence of female directors in Nigerian corporate boards. It is

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 MRS Journal of Accounting and Business Management Vol-2, Iss-8 (August-2025): 41-50
also possible that the financial effects of gender diversity require a compliance with governance codes by monitoring not
longer time horizon to materialize or may depend on moderating just board composition but also the effectiveness of
factors such as board expertise, CSR practices, and organizational board activities. Periodic governance audits and
culture. performance-linked board evaluations could help
strengthen governance outcomes.
Model Fit and Implications
 Encourage Capacity Building and Expertise
Although the model is statistically significant (F-statistic = Development: Both independent and female directors
5.068, p < 0.01), it explains only 5.2% of the variation in should be provided with continuous professional
profitability (R² = 0.0522). This low explanatory power suggests development opportunities to enhance their competence
that other factors, such as firm size, leverage, market conditions, in corporate governance, financial oversight, and risk
and managerial competencies, play a more substantial role in management. This would improve the quality of
determining profitability in the insurance sector. This finding contributions they make to board deliberations.
aligns with prior research (e.g., Ogunwale et al., 2024)  Incorporate Broader Governance Reforms: Given the low
emphasizing that governance attributes, while important, represent explanatory power of board structure alone, firms should
only one component of a firm’s financial outcomes. adopt a holistic approach that integrates other
governance mechanisms—such as ownership structure,
Conclusion and Recommendations audit quality, and executive accountability—alongside
This study examined the effect of board structure, board composition to improve profitability.
measured by board independence (BI) and board gender diversity  Foster a Long-Term Perspective on Gender Diversity:
(BGD), on the financial performance of listed Nigerian insurance Since the benefits of gender diversity may manifest in
companies over the period 2013–2023. Using a fixed effects panel non-financial outcomes or over longer time horizons,
regression approach, the findings reveal that board independence firms should view female board representation as a
has a positive and statistically significant effect on profitability, strategic investment in sustainable growth rather than
while board gender diversity exhibits a negative but statistically expecting immediate financial returns.
insignificant effect. These results imply that independent directors,
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