Board Characteristics and Cost of Capital of Listed Consumer Goods Companies in Nigeria

Abstract

This study examines how board composition affects consumer goods companies' cost of capital in Nigeria. The relationships were found using pooled ordinary least-squares multiple regression analysis. Endogeneity and alternative measures did not affect the results' robustness. The study used panel data of thirteen (13) selected listed consumer goods companies in Nigeria that had consistently published their audited annual financial reports from 2007 to 2021 to achieve these objectives. A descriptive research design was used in the study. Statistical tools (STATA 17) were used to analyze the data using the panel multiple regression technique. Based on the weighted average cost of capital, the results showed a negative and significant relationship between board gender diversity and board size. Based on the results of the study, which were examined using the study's hypothesis, the following conclusion was reached. Firstly, there is a substantial and negative correlation between cost of capital and board size according to this study. Additionally, the results showed a negative and significant correlation between the cost of capital and the gender of the board. The following suggestions are made for the efficient and effective governance of consumer goods companies listed in Nigeria: to promote gender equality and improve good management, it is encouraged to maintain the maximum number of directors on the board by the Nigerian code of corporate governance and to give preference to the appointment of women directors for those companies with none. These results will help policymakers, regulators, and consumer goods companies assess whether the current corporate governance reforms are appropriate in preventing misconduct, mismanagement, and outrages to meet stakeholder goals.

Keywords: board gender diversity, board size, weighted average cost of capital JEL Codes: C31, C32, M47, M48