Board Independence and Earnings Quality in Nigerian Listed Banks: An Empirical Investigation Using Accrual-Based Models

This study empirically investigates the relationship between board independence and earnings quality in Nigerian listed deposit money banks, applying accrual-based earnings management models. The Central Bank of Nigeria's corporate governance framework mandates minimum levels of board independence in banks, yet the effectiveness of these requirements in constraining earnings manipulation has not been sufficiently tested in recent empirical literature. Earnings quality, proxied by the absolute magnitude of discretionary accruals estimated using the modified Jones model and the Dechow-Dichev model, serves as the primary dependent variable. Board independence is measured as the proportion of independent non-executive directors to total board size, supplemented by an independence quality index incorporating director busyness, tenure, and cross-directorship exposure. Panel data spanning ten years are sourced from annual reports of fourteen listed commercial banks. Fixed effects regression controls for bank size, capital adequacy ratio, non-performing loan ratio, and return on equity. The study addresses a specific gap identified in the post-2018 governance reform period, providing more temporally relevant evidence on the governance-earnings relationship. Preliminary analysis suggests that banks with proportionally higher board independence but lower director busyness exhibit meaningfully better earnings quality. The study contributes original empirical evidence to the Nigerian banking governance literature and offers policy insights for the Central Bank of Nigeria and the Financial Reporting Council. Keywords: board independence, earnings quality, discretionary accruals, corporate governance, Nigerian banks.