Board Characteristics, Intellectual Capital Efficiency and Financial Performance of Financial Service Firms in Nigeria.

Abstract

The study investigated the influence of intellectual capital efficiency on the financial performance of listed financial service firms in Nigeria as well as the moderating role of board characteristics on this relationship. Ex-post facto research design was adopted and data extracted from the annual reports and accounts of 25 out of 42 financial institutions listed on the Nigerian Exchange Group. The data were analysed using panel data regression techniques including OLS, FE and RE while Hausman tests specified model selection across the models. Findings indicate varied association between the variables. HCE exerts significantly positive influence on the proxies of financial performance including RVG, ROA and ROE. In the same vein, BGE and BFE exhibit significantly positive influence on financial performance. Conversely, the interaction effects indicate negative moderation of BFE and BIN on the existing positive relationship. The study concludes that while making better use of intellectual capital can help improve financial results, how effective board characteristics are depends on the kind of governance practices that are in place. The study recommends that financial service companies set up governance systems that offer good oversight but also let them be flexible and adaptable in their strategies, so they can make the most of the value created by their intellectual capital.