Effect of Corporate Governance Attributes on Investment Decision of Listed Insurance Firms in Nigeria

Abstract

Corporate governance is not enacted by government to regulate corporate entity only but also to enhance accountability and transparency. This study examined the effect of corporate governance attributes on investment decision of listed insurance firms in Nigeria. Specifically, the study examined the effect of managerial ownership, institutional ownership, independent non-executive directors, board size, board gender diversity and board member financial expertise on investment decision of listed insurance firms in Nigeria. This study adopted ex-post facto research design. The population of the study comprised 22 insurance firms listed on Nigeria Exchange Group (NGX) as at 31st December,2021. The data for the study were collected from secondary sources through annual reports for the period of 11 years from 2011 to 2021. The data collected were analyse using panel regression technique with the aid of STATA 15. After carrying out Hausman test between fixed effect model and random effect model, fixed effect model was used to test the hypotheses of the study. The findings revealed that managerial ownership and institutional ownership have insignificant negative effect on investment decision. In addition, the result revealed that independent non-executive directors, board size and board member financial expertise have significant positive effect on investment decision. Finally, the result revealed that board gender diversity has insignificant positive effect investment decision. The study concludes that board size, independent non-executive directors and board member financial expertise have significant positive effect on investment decision of listed insurance firms in Nigeria and Therefore, it is recommended that FRC Nigeria should increase board size, independent non-executive directors and board member financial expertise through the Nigeria code of corporate governance(NCCG) of listed insurance firms in Nigeria as these corporate governance attributes are very important in contributing to investment decision.