The Moderating Role of Firm Size on Board Independence and Liquidity of Listed Manufacturing Firms in Nigeria

Abstract

 The effect of board independence on the liquidity of manufacturing firms has been a subject of increasing research interest. While some studies suggests that independent boards often have superior financial management and reporting standards, and boosting liquidity, some others differ on this proposition. This study examined the moderating role of firm size on board independence and liquidity of listed manufacturing firms in Nigeria. The study has a population of 50 listed manufacturing firms and a sample of 31 listed firms which was arrived at based on a criterion that only listed manufacturing firms that met the selection criteria over the 15 years period of the study (2009-2023) were considered. This study used secondary sources of data gathering that were collected from the annual reports and accounts of the listed manufacturing firms that were sampled. The multiple regression technique was used to evaluate the data gathered. Therefore, this study found that board independence has a negative significant effect on the liquidity of listed manufacturing firms in Nigeria. However, the interaction of firm size on board independence has a negative significant effect on liquidity. This study concluded that the moderating role of firm size on board independence and liquidity of manufacturing firms in Nigeria has a significantly negative effect and therefore no policy implication in relation to the boards of listed Nigerian manufacturing firms. 

Keywords: board independence, firm size, liquidity, listed manufacturing firms, Nigeria