Corporate Governance Mechanisms and Accounting Conservatism: An Empirical Study of Listed Information and Communication Technology (ICT) Companies in Nigeria

Abstract

This study investigates the effect of corporate governance mechanisms on accounting conservatism in listed Information and Communication Technology (ICT) companies in Nigeria. The analysis focused on four governance variables: board independence, board size, audit committee effectiveness, and ownership structure, using secondary data from annual reports of listed ICT firms. An econometric approach was employed to test the research hypotheses and evaluate the relationship between governance mechanisms and conservatism in financial reporting. The findings reveal that board size has a significant negative effect on accounting conservatism, indicating that larger boards are associated with less prudent reporting practices. In contrast, board independence, audit committee effectiveness, and ownership structure do not exhibit statistically significant effects on conservatism. These results suggest that in Nigeria’s ICT sector, where innovation and agility are crucial, oversized boards may weaken accountability and dilute the enforcement of conservative accounting policies. The insignificance of other governance variables underscores the contextual limitations of formal governance mechanisms when regulatory enforcement is weak. The study concludes that board structure, particularly board size, is the most effective lever for influencing accounting conservatism in Nigerian ICT firms. It contributes to knowledge by providing sector-specific evidence from an underexplored industry, demonstrating the contextdependent nature of governance effectiveness, and reinforcing the agency theory argument for smaller, more cohesive boards. The study recommends optimizing board size, strengthening audit committee capacity, and enhancing the quality and independence of board appointments.