Risk Management Committee and Earnings Quality of Listed Nigerian Insurance Firms

Abstract

This study examines the effect of risk management committees on earnings quality of listed insurance firms in Nigeria. This study employed an ex-post facto research design to collect data from annual reports, corporate governance disclosures, and financial databases of 23 Nigerian insurance firms listed on the Nigerian Exchange Group (NGX). The ex-post facto design was chosen to use existing data without manipulation. Census sampling was applied to include the entire population, covering a twelve-year period from 2012 to 2023, which corresponds with the transition of the Nigerian Stock Exchange to the NGX. The study utilized both descriptive statistics and inferential statistics, such as panel regression and correlational analysis, to analyse the data comprehensively. The findings revealed that size of the risk management committee and its gender diversity were found to have a negative and significant effect on earnings quality. Conversely, the frequency of risk management committee meetings and the independence of the committee members were shown to positively and significantly impact earnings quality. These findings reveal the importance of optimizing the composition and functioning of risk management committees to enhance financial reporting quality within the Nigerian insurance sector. The study concludes that the frequent meetings and the inclusion of independent members in the risk management committee are crucial for improving the quality of financial reporting. Therefore, for insurance firms to achieve higher earnings quality, careful consideration must be given to the composition and operational dynamics of their risk management committees.