Board Cognitive Diversity and Firm Performance Nexus: Evidence From Nigeria

Aifuwa, H.O., Musa, S., Gold, N. O. & Usman, K. M. (2020). Board cognitive diversity and firm performance nexus: Evidence from Nigeria. International Journal of Management, Innovation & Entrepreneurial Research, 6(2), 88-99.

12 Pages Posted: 14 Jan 2021

See all articles by Hope Osayantin Aifuwa

Hope Osayantin Aifuwa

Department of Accounting, Faculty of Management Sciences, University of Benin, Benin City

Musa Saidu

Kwara State University

Date Written: October 25, 2020

Abstract

Purpose of the study: This study examined the influence of board cognitive diversity on firm performance in Nigeria. The researchers investigated consumer goods firms listed in the Nigeria Stock Exchange from 2013 to 2018.

Methodology: This research is hinged on the positivist research philosophy; and the deductive research approach. The study adopted the multi-method quantitative research design. Data was hand-collected from the annual financial statements and firms’ websites of consumer goods firms. The researchers measured board cognitive diversity by educational level diversity, education background diversity, and professional member diversity; while performance was measured via financial performance (ROA) and market performance (Tobin's Q). Panel least squares were used to estimate the model of the study.

Main Findings: Results from the panel least squares regression revealed mixed findings on the nexus between the proxies of board cognitive diversity and firm performance in Nigeria. Specifically, we found that education level diversity and professional member diversity of board members positively and significantly affects market performance.In contrast, the educational background diversity of the board negatively and significantly affects the market performance of consumer goods firms in Nigeria. Furthermore, we found no evidence on the nexus between educational level diversity; educational background diversity; professional membership diversity of board members, and financial performance of firms investigated.

Implications/Applications: The researchers concluded that board cognitive diversity partially influences firm performance in Nigeria.The study recommended that firms in Nigeria, specifically consumer goods firms, should encourage more representation of board directors with a postgraduate degree. This is because they have advanced knowledge and expertise to improve the firm's performance.Novelty/Originality of this study: This is pioneer research to investigate the influence of board cognitive diversity on firm performance in Nigeria.

Keywords: Education Level Diversity, Education Background Diversity, Professional Membership Diversity, ROA, Tobin’s Board Cognitive Diversity.

JEL Classification: j5

Suggested Citation

Aifuwa, Hope Osayantin and Saidu, Musa, Board Cognitive Diversity and Firm Performance Nexus: Evidence From Nigeria (October 25, 2020). Aifuwa, H.O., Musa, S., Gold, N. O. & Usman, K. M. (2020). Board cognitive diversity and firm performance nexus: Evidence from Nigeria. International Journal of Management, Innovation & Entrepreneurial Research, 6(2), 88-99., Available at SSRN: https://ssrn.com/abstract=3718600

Hope Osayantin Aifuwa (Contact Author)

Department of Accounting, Faculty of Management Sciences, University of Benin, Benin City ( email )

Edo State, Nigeria
Benin, CA
Nigeria
+2348113232082 (Phone)

Musa Saidu

Kwara State University

Kwara State University Rd
Malete
Nigeria

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