EFFECT OF BOARD MEMBERS’ DYNAMICS ON FINANCIAL PERFORMANCE OF INSURANCE COMPANY IN NIGERIA USING CARAMELS FINANCIAL PERFORMANCE INDICATORS

Rukayat Bukola ADEJARE (B.Sc. M.Sc., ACIBN), Ismaila Daudu ALIU (Ph.D, ACA)

Abstract

This study examines the effect of board members’ dynamics on financial performance of insurance company using CARAMELS financial performance indicators. Expost-facto research design was employed. Population of the study include all the 22 listed insurance companies in Nigeria from 2012 to 2018. Secondary data sourced from annual reports of insurance companies was analysed with descriptive and inferential statistics. The results of Serially Correlated Disturbance Random Effects revealed that all the board members’ dynamics has a significant relationship with at least a component of CARAMELS indicator. The study concludes that board size, board gender diversity and board diligence increase the management efficiency of insurance companies in Nigeria. The study also concludes that presence of foreign board member and board compensation positively relates to earnings and profitability but negatively relates to reinsurance and actuarial of listed insurance companies in Nigeria. Board ownership negatively influences the asset quality and earnings and profitability of listed insurance companies in Nigeria. Therefore, the study recommends that required board size, board gender diversity and board diligence should be strengthening to enhance management efficiency of listed insurance company in Nigeria. A standing policy should be developed on the number of foreigners that must be included in the board of director of the insurance company in Nigeria among others.

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