Board Attitude towards risk-taking, Ownership Structure and Quality of Accounting Information of Listed Insurance Companies in Nigeria
Keywords:
Ownership structure, board of directors, Insurable risk, quality accounting information
Abstract
The global economic crisis has increased focus on the role of board of directors in ensuring integrity and transparency in corporate reporting of companies world-wide. Board characteristics are crucial in an organisation saddled with the responsibility of making decisions and determining the ability of monitoring management in carrying out its responsibilities efficiently and effectively. Against this background, this study examines the relationship between board’s risk-taking attitude, ownership structures and quality of accounting information in insurance companies in Nigeria. Twenty-two insurance companies were randomly selected, and primary data were obtained from employees through survey questionnaire. The data collected were analysed using multiple regression analysis. Findings from the results show a positive significant relationship between board’s risk-taking attitude, ownership structure and quality of accounting information. The higher the board’s attitude to taking risk, the more the board improves the quality of accounting information and vice versa. Likewise, well organised ownership structure in insurance companies provides sound quality of accounting information issues to the public. This suggests that attitude of the board of directors to risk-taking and ownership structure play key role in providing sound quality of accounting information. Consequently, the study recommended that regulatory agencies of insurance companies in Nigeria should enforce compliance with disclosures of insurable risks and provide more framework and policies on ownership structure disclosures that will continue to enhance the quality of accounting information
References
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Nyuur, R.B., Ofori, D.F. & Dedzo, B.Q. (2020). Corporate governance in banks: impact of board attributes on banks performance. African J. Accounting, Auditing and Finance, 7(1), 24–41.
Omran, M. & Tahat, Y. A. (2020). Does institutional ownership affect the value relevance of accounting information? International Journal of Accounting & Information Management 28 (2), 323-342.
Oseni, M., Ogunlade, O., Olasupo, S. F., & Adeleke, E. O. (2019). Prospects and challenges of financial reporting in Nigeria. Specialty Journal of Accounting and Economics, 5(1), 1-7.
Paulo, E., Martins, E., & Girao, L. F. (2014). Accounting Information Quality in Latin-and North-American Public Firms. In Accounting in Latin America. America: Emerald Group Publishing Limited.
Pere, S. D., & Obdah, O. D. (2018). Corporate Governance and Nigerian Insurance Industry. European Journal of Accounting, Finance and Investment, 4(11), 5-13.
Pearce II, J.A. & Patel, P.C. (2018). Board of director efficacy and firm performance variability. Long Range Planning, 51(6), 911–926.
Torbira, L. L. (2018). Insurance risk management: a correlate of economic growth in Nigeria. Research Journal of Finance and Accounting, 9(7), 1-15.
Uribe-Bohorquez, M.V, Martínez-Ferrero, J. & García-Sánchez, I.M. (2018). Board independence and firm performance: the moderating effect of institutional context. Journal of Business Research, 88, 28–43.
Yunos, R. M., Smith, M., Ismail, Z. & Ahmad, S. A. (2011). Inside concentrated owners, board of directors and accounting conservatism. Annual Summit on Business and Entrepreneurial Studies (ASBES 2011) Proceeding.
Almujamed, H. I. & Mishari, M. A. (2020). Corporate governance and value relevance of accounting information: evidence from Kuwait. International Journal of Ethics and Systems, 36(2), 249-262. https://doi.org/10.1108/IJOES-08-2019-0140
Ali, S., Rehman, R.U., Sarwar, B., Shoukat, A. & Farooq, M. (2022). Board financial expertise and foreign institutional investment: the moderating role of ownership concentration. Review of International Business and Strategy, 32 (3), 325-345.
Alnabsha, A., Abdou, H. A., Ntim, C. G., & Elamer, A. A (2016). Corporate boards, ownership structures and corporate disclosures: evidence from a developing country. Journal of Applied Accounting Research, https://doi.org/10.1108/JAAR-01-2016-0001
Asiedu, K. F., & Deffor, E. W. (2017). Fighting corruption by means of effective internal audit function: Evidence from the Ghanaian public sector. International Journal of Auditing, 21(1), 82-99. Available at: https://doi.org/10.1111/ijau.12082.
Asogwa, C.I, Ofoegbu, G.N. & Modum, U. (2020). Effect of corporate governance on income persistence and value relevance of quoted Nigerian firms. African J. Accounting, Auditing and Finance, 7(1), 42–65.
Boubakri, N. (2011). Corporate governance and issues from the insurance industry. Journal of Risk and Insurance, 41-64. doi:10.1111/j.1539-6975.2011.01429.x
Brick, I. E., & Chidambaran, N. K. (2008). Board monitoring, firm risk and external regulation. Journal of Regulatory Economics, 33, 87-116.
Carabelli, M. (2021). Corporate Governance and risk taking: Evidence from Italian Listed Companies. The International Journal of Business & Management, 9(7), 300-303.
Coles, J. L., Daniel, N. &Naveen, L. (2006). Managerial incentives and risk-taking.Journal of Financial Economics, 79, 431-468.
Chen, J. & Roberts, R. (2010). Toward a more coherent understanding of the organization–society relationship: a theoretical consideration for social and environmental accounting research. Journal of Business Ethics, 97(4), 651- 665.
Elamer, A, AlHares, A, Ntim, C. & Benyazid, I. (2018). The corporate governance–risk-taking nexus: evidence from insurance companies. International Journal of Ethics and Systems, 34(4), 493-509.
Ellili, N. D. (2013). The ownership structure, the board of directors and the quality of accounting information. Corporate Ownership & Control. 10(4), 420-433.
Fadun, O. S. & Shoyemi, O. S. (2018). Insurance investment funds and economic growth in Nigeria: an empirical analysis (2000-2015). International of Development and Management Review, 13(1), 73-88.
Fodio, M. I., Ibikunle, J., & Oba, V. C. (2013). Corporate governance mechanisms and reported earnings quality in listed Nigerian insurance firms. International Journal of Finance and Accounting, 2(5), 279-286.
Gray, D. N. (2014). Basic Econometrics (4th ed.). USA: McGraw-Hill Publishing House.
Harun, M. S., Hussainey, K., Kharuddin, K. A. M. & Al Farooque, M. (2020). CSR disclosure, corporate governance, and firm value: a study on GCC Islamic banks. International Journal of Accounting & Information Management. 1834-7649, https//10.1108/IJAIM-08-2019-0103
Herealth, S., & Albarqi, N. (2017). Financial reporting quality; a literature review. International Journal of Business Management and Commerce, 2(2), 1-14.
Hodgdon, C., & Hughes, S. B. (2016). The effect of corporate governance, auditor choice and global activities on EU company disclosures of estimates and judgments. Journal of the Chinese Institute of Chemical Engineers. doi:dx.doi.org/10.1016/j.intaccaudtax.2016.02.002
Ho, C. L., Lai, G. C., & Lee, J. P. (2013). Organizational structure, board composition and risk taking in the U.S. property casualty insurance industry. Journal of risk and Insurance, 80, 169–203.
Huang, L, Lai, G. C, Lu, E. &McNamara, M. (2020). Auditor quality, audit fees, organizational structure, and risk taking in the US life insurance industry. Risk Manag Insur Rev, 23, 151–182
Jensen, M.C. & Meckling, W.H. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.
Kabuye, F., Nkundanbanyaga, S. K., Opiso, J. & Nakabuye, Z. (2017). Internal audit organisational status, competencies, activities, and fraud management in the financial services sector. Managerial Auditing Journal, 32(4)http://dx.doi.org/10.1108/MAJ-09-2016-1452
Kukah, M. A. (2015). Corporate governance and accounting information quality of listed firms in Ghana. University of Ghana Business School, 1-25.
Littlejohn, S. T. (2009). Board of director characteristics and earnings quality surrounding implementation of a corporate governance code in Mexico. Journal of International Accounting, Auditing and Taxation, 18(1), 1-13.
Nasiru, M.& Ahmed, H. S. (2021). Board attributes, ownership structure and risk management: a proposed model for insurance firms in Nigeria. Journal of Economic Info, 8(3), 104-129.
Nyuur, R.B., Ofori, D.F. & Dedzo, B.Q. (2020). Corporate governance in banks: impact of board attributes on banks performance. African J. Accounting, Auditing and Finance, 7(1), 24–41.
Omran, M. & Tahat, Y. A. (2020). Does institutional ownership affect the value relevance of accounting information? International Journal of Accounting & Information Management 28 (2), 323-342.
Oseni, M., Ogunlade, O., Olasupo, S. F., & Adeleke, E. O. (2019). Prospects and challenges of financial reporting in Nigeria. Specialty Journal of Accounting and Economics, 5(1), 1-7.
Paulo, E., Martins, E., & Girao, L. F. (2014). Accounting Information Quality in Latin-and North-American Public Firms. In Accounting in Latin America. America: Emerald Group Publishing Limited.
Pere, S. D., & Obdah, O. D. (2018). Corporate Governance and Nigerian Insurance Industry. European Journal of Accounting, Finance and Investment, 4(11), 5-13.
Pearce II, J.A. & Patel, P.C. (2018). Board of director efficacy and firm performance variability. Long Range Planning, 51(6), 911–926.
Torbira, L. L. (2018). Insurance risk management: a correlate of economic growth in Nigeria. Research Journal of Finance and Accounting, 9(7), 1-15.
Uribe-Bohorquez, M.V, Martínez-Ferrero, J. & García-Sánchez, I.M. (2018). Board independence and firm performance: the moderating effect of institutional context. Journal of Business Research, 88, 28–43.
Yunos, R. M., Smith, M., Ismail, Z. & Ahmad, S. A. (2011). Inside concentrated owners, board of directors and accounting conservatism. Annual Summit on Business and Entrepreneurial Studies (ASBES 2011) Proceeding.
Published
2023-09-10
How to Cite
Afolabi, A., Ololade, B. M., & Peters, A. (2023). Board Attitude towards risk-taking, Ownership Structure and Quality of Accounting Information of Listed Insurance Companies in Nigeria. Global Journal of Accounting, 9(1), 34-45. Retrieved from http://gja.unilag.edu.ng/article/view/1846
Section
Articles
