Internet Financial Reporting and Corporate Governance Mechanisms: Empirical Evidence on the Financial Performance of Firms Listed on the Nigeria Exchange Group (Published)
Internet Financial Reporting (IFR) has become an important tool in increasing transparency, accountability and timely reporting of financial information and corporate governance mechanisms (CGMs) is important in the efforts of harmonising the actions of the managers with the interests of the shareholders. Though IFR and governance reforms are becoming increasingly popular in Nigeria, very little empirical information is available regarding the joint impact of these two on the performance of the quoted companies. The research design was longitudinal research with the basis of secondary data. There were 151 quoted companies on the Nigeria Exchange Group (NGX) that comprised 47 financial and 104 non-financial companies and this was over the period 2012 to 2023. Out of this population, 56 sampled companies (45 non-financial and 11 financial companies) were sampled purposively on information available and adhering to International Financial Reporting Standards (IFRS). The year 2012 was selected as a base year since this was the year when quoted companies in Nigeria adopted the IFRS. The published and audited corporate filings and financial statements were used to source data. Measurements of the IFR, CGMs, and financial performance (return on assets, return on equity, and return on capital employed), and control variables were used as the variables. The analysis of data was performed with the help of descriptive statistics and generalised method of moment (GMM) estimation technique. The results found that IFR and CGMs had positive influence on financial performance. To be more precise, the joint IFR and CGMs yielded a value of coefficient of 35.854 on the return on assets, 43.085 on the return on equity and 37.832 on the return on capital employed. The three effects were statistically significant as their p-values were 0.428, 0.164 and 0.341 respectively, which means that better internet-based financial disclosure and effective mechanisms of governance are related to better financial performance of quoted companies in Nigeria. The paper concludes that IFR and CGMs are a significant improvement in the financial performance of the quoted companies in Nigeria through a better use of transparency and accountability, as well as stakeholder engagement. The recommendation that the quoted companies in Nigeria should still use IFR as a strategic tool of enhancing transparency and strengthening stakeholder relationship by making regular and convenient online disclosures of their financial results is recommended. Boards also ought to review unnecessary or ineffective meetings and channel them into strategy purposes, especially those concerning the quality of disclosure and performance improvement. In addition, the use of IFR by quoted companies should be motivated and as needed required by the regulatory bodies like the Financial Reporting Council of Nigeria (FRCN) and the Securities and Exchange Commission (SEC) so that the practise of disclosure is unified, and investor confidence is increased as a result, and the overall performance of the corporate sector is positively impacted.
Keywords: Corporate Governance Mechanisms, Financial Performance, Nigerian quoted companies, internet financial reporting