Female Directors’ Role on Capital Structure and Firm Performance Nexus: New Evidence from an Emerging Market - Nigeria

Authors

DOI:

https://doi.org/10.5195/emaj.2024.348

Keywords:

Capital Structure, Firm Performance, Female Board Directors, Corporate Governance, Nigeria

Abstract

This study investigates the moderating role of female board directors on the relationship between capital structure and firm performance in Nigerian non-financial firms. The study builds on previous research that highlights the importance of gender diversity in corporate governance and its potential to enhance firm outcomes. Using data from 70 non-financial firms listed on the Nigerian Exchange Group from 2012 to 2021, the study applies the two-step system GMM approach to mitigate endogeneity issues. It focuses on various capital structure measures, such as debt-to-asset and debt-to-equity ratios, and examines their relationship with firm performance, with the presence of female directors as a moderating variable. The study finds that female directors moderate the relationship between capital structure and firm performance, improving the impact of debt levels on profitability while reducing market performance. This study contributes to literature by providing new evidence from an emerging market context on how board gender diversity influences financial decision-making and firm outcomes in Nigeria.

Author Biographies

Idorenyin Okon, University of Ibadan

Idorenyin Okon is a Doctoral Research Fellow who is doing his PhD at the University of Ibadan, Nigeria. His teaching interests are Financial Accounting, Research Methodology, and Corporate Finance. His research interests include Corporate Governance, Corporate Reporting, Corporate Finance,  and Risk Management. He is also the Lead Consultant, IdRatios Nigeria; A research institute with a vision of advancing the field of business accounting and finance research education and practice through cutting-edge data research, training, and consultancy.

Ozele Clement, Igbenedion University, Nigeria

Ozele E. Clement is a Ph.D holder and a lecturer in accounting. His teaching interest is in Financial Accounting and reporting. His research interests include Corporate Governance and Corporate Reporting.

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Published

2025-03-12

Issue

Vol. 14 No. 2 (2024)

Section

Articles

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