Effect of Governance Disclosure on Value of Listed Financial Service Companies in Nigeria

Abstract

The study examined the effect of governance disclosure on the value of listed financial service companies in Nigeria. Specifically, the study investigated the effect of Executive Compensation Disclosure (EXCD), Risk Management Disclosure (RMD), and Transparency and Accountability Disclosure (TAD) on firm value measured by Tobin’s Q. The study was anchored on Stakeholder Theory and Signaling Theory, which explain how governance disclosure enhances stakeholder confidence and reduces information asymmetry. An ex-post facto research design was adopted, while panel data covering listed financial service companies in Nigeria for the study period were analyzed using descriptive statistics, correlation analysis, Variance Inflation Factor, Hausman specification test, and fixed effect regression technique. The Hausman test supported the adoption of the fixed effect model for the analysis. The regression results revealed that Executive Compensation Disclosure has a positive and significant effect on firm value (β = 0.185318, p < 0.05), indicating that transparent disclosure of executive remuneration enhances investor confidence and market valuation. Transparency and Accountability Disclosure also showed a positive and significant effect on firm value (β = 0.156761, p < 0.05), implying that improved governance transparency strengthens corporate reputation and stakeholder trust. However, Risk Management Disclosure exhibited a negative and insignificant effect on firm value (β = -0.025090, p > 0.05). The study concluded that governance disclosure significantly enhances firm value among listed financial service companies in Nigeria. The study recommended improved governance transparency, stronger executive compensation reporting, and enhanced regulatory enforcement of disclosure standards.