EFFECT OF BOARD COMMITTEE ON BANKRUPTCY RISK: A COMPARATIVE STUDY OF BANKS IN NIGERIA AND SOUTH AFRICA
Keywords:
Audit Committee Independence, Bankruptcy Risk, Board Gender DiversityAbstract
The study ascertained the effect of board committee on bankruptcy risk in deposit money banks in Nigeria and South Africa. The specific objectives are to: determine the effect of audit committee independence on bankruptcy risk of deposit money banks in Nigeria and South Africa; and ascertain the effect of board gender diversity on bankruptcy risk of deposit money banks in Nigeria and South Africa. This study adopted the ex-post facto research design. A sample of eight deposit money banks, each from the two countries was purposively selected while other banks were inevitably excluded for incomplete data. The data were extracted from the annual reports and accounts of the selected banks in Nigeria and South Africa. The panel data were analyzed with descriptive statistics, and inferential statistics using Pearson correlation, and panel regression analysis. The study showed that the audit committee independence had a positive and significant effect on bankruptcy risk for Nigeria and South Africa. The result revealed that board gender diversity had a negative and significant effect for Nigerian deposit money banks, while in South Africa revealed a positive but has no significant effect on bankruptcy risk. Based on the findings, audit independence should be encouraged hence it creates an avenue for collective deliberates on issues that are significant to the banks such that straighten their operations, as well as preventing it from going bankrupt.
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