The Impact of Corporate Governance on the Quality of Financial Reporting in the Nigerian Chemical and Paint Industry

Abstract

Corporate governance is of fundamental significance in the business affairs of the Nigerian Chemical and paint Industry. It encompasses the effective administrative role of the management towards achieving sound and growing financial performance in this industry. This study seeks to examine the impact of corporate governance on the quality of financial reporting in the Nigerian Chemical and paint Industry. The total number of quoted companies on the Nigeria Stock Exchange as at December 2013 is taken as population, while sample of four (4) companies were selected for a period of five (5) years (i.e. 2009-2013).The data used were obtained through secondary source, that is from the annual reports and accounts of the selected companies and the data where analyzed using correlation and regression. The study concluded that Board size as well as Board Independence have insignificant effect on the quality of financial reporting in the Nigerian Chemical and paint Industry. It was also concluded that the presence of non-executive directors in the audit committee of firms in the Nigerian Chemical and paint Industry have an insignificant effect on financial reporting quality. It was however recommended that the regulatory agencies should set up a committee to verify the appointment of non-executive directors so that grey directors should not form part of the board of firms in the industry, SEC in collaboration with other regulatory agencies should ensure that firms in the Nigerian Chemical and paint Industry have competent and experienced directors on their board. Finally, the non-executive directors should possess the technical skills and experience necessary to ensure that the high quality reporting system exist in the Nigerian Chemical and paint Industry.