Examination of the Relationship Between Board Diversity and Firm Performance in Nigerian Quoted Manufacturing Firms

Board diversity is theoretically linked to better strategic decision-making and firm performance, and examining this relationship in Nigerian quoted manufacturing firms provides evidence for corporate governance reform. This study examined the relationship between board diversity dimensions (gender diversity, educational background diversity, and ethnic diversity) and firm performance among 25 manufacturing companies listed on the Nigerian Exchange Group for the period 2019 to 2023. Secondary data were extracted from annual reports and financial statements. Firm performance was measured by return on equity, return on assets, and Tobin's Q. Board diversity was operationalised by the proportion of women directors, number of professional disciplines represented, and number of ethnic groups among directors. Panel data regression using fixed and random effects models was employed. Results showed that gender diversity (proportion of female directors) had a significant positive effect on return on equity (coefficient = 0.034, p < 0.05). Educational background diversity positively predicted Tobin's Q (coefficient = 0.21, p < 0.05). Ethnic diversity showed no significant independent effect on any performance measure. Board size was a significant negative moderator of the gender diversity-performance relationship in large boards (above 12 members). The study concludes that gender and educational diversity on boards contribute positively to firm performance in Nigerian manufacturing, and recommends mandatory board gender diversity targets in the revised Nigerian Code of Corporate Governance. Keywords: board diversity, firm performance, corporate governance, Nigerian manufacturing, gender diversity