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Research Paper | Risk Management | Nigeria | Volume 10 Issue 10, October 2021
Risk Management Practices and Firm Performance: Evidence from Non - Financial Listed Companies in Nigeria
Dr Adebayo Ganiyu Adebowale
Abstract: The study examines the effect of risk management practices on the performance of non - financial listed companies in Nigeria. Risk management practices were proxied by the Enterprise Risk Management, Risk Management Committee, Chief Risk Officer, Audit Committee, size of the Board, Independent Directors, the proportion of non - executive Directors on the board, the ratio of financial experts on the board, a whistleblower policy and Internal Audit in the companies. The firm performance was measured by Return on Assets, Return on Equity and Tobin's Q. The study adopted an ex - post facto research design and selected a sample of 44 firms from a target population of 114 firms. It used secondary data obtained from the annual reports and financial statements of non - financial companies from 2010 to 2019 and the Nigerian Exchange Limited (formerly NSE) and its Factbooks. Descriptive statistics were deployed to analyse the research questions. The inferential statistics (simple and multiple Regression analysis, t - test and Analysis of Variance) were deployed to investigate the relationship between the dependent and independent variables as revealed by the study's hypotheses. Results showed that risk management practices have no significant effect on the performance (ROA, ROE, and Tobin's Q) of non - financial companies listed on the Nigerian Exchange Limited. However, the multiple regression analysis revealed that only board size was statistically significant to influence ROE positively, and only Independent Director was also statistically significant to influence Tobin's Q positively. The study concluded that risk management should be taken seriously by listed non - financial companies in Nigeria to improve their performance; they should take the practices beyond mere compliance with the laws or Code of corporate governance. The study recommended increased monitoring of companies' risk management practices by the Risk Management Committee, Securities and Exchange Commission (SEC), Nigerian Exchange Limited (NGX), and Financial Reporting Council of Nigeria (FRCN).
Keywords: FRCN, Non - financial listed Companies, NGX, Performance, Risk Management practices, SEC
Edition: Volume 10 Issue 10, October 2021,
Pages: 1121 - 1136