Board Attributes and Effectiveness of Quality of Consolidated Financial Statements: A Critical Analysis of Selected Nigerian Companies

Abstract

The study examined the effectiveness of the quality of consolidated financial statements and assess the influence of board attributes in enhancing financial reporting quality in Nigeria. The research employed a mixed-method survey strategy in data collection. Data were collected from primary and secondary sources. Primary data were collected using a structured questionnaire. Data were gathered from the 2014-2024 annual reports of twenty (20) sample companies in Nigeria. Data were examined through descriptive and inferential statistics. Generalised Linear Model and Variance Ratio Test are traditionally applied to identify whether a random walk is present in a time series. The results indicate that board attributes have a statistically significant negative impact on the reporting quality of consolidated financial reports (β = -0.0157, p = 0.0055), i.e., more superior-quality board attributes may ironically be associated with lower report quality. Besides, International Financial Reporting Standards compliance has a statistically significant strong negative impact (β = -0.1333, p = 0.0000), and it has a significant impact on financial report outcomes. On the other hand, regulatory compliance has a very small and statistically insignificant impact (β = 0.0019, p = 0.5764), demonstrating minimal impact on reporting quality. The model is greatly fitted, as seen from a likelihood ratio (LR) figure of 74.38 (p < 0.01), thereby ensuring its fitness. The negative effect of these findings is that boards that adopt worldwide practices without contextual adaptation can worsen financial reporting by generating confusion and misalignment with local conditions, and this creates a gap between formal board structure and actual performance, leading to poor financial reporting quality in spite of seemingly good governance. The study shows that governance and IFRS compliance are essential, but their adverse associations need to be explored further. The study concluded that there is a need to encourage more effective monitoring and review of governance processes to align with the objectives of financial reporting standards. Regulators must also consider individual measures to further reinforce the positive impact of board effectiveness on financial transparency.