BOARD GENDER DIVERSITY AS A GOVERNANCE BUFFER: EVIDENCE FROM CEO POWER AND FINANCIAL PERFORMANCE RISK

Abstract

The concentration of CEO power within Nigeria’s emerging economy presents both opportunities and governance risks, particularly for manufacturing firms navigating volatile performance environments. This study investigates how various dimensions of CEO power to include structural, expert, ownership, and prestige, impact financial performance risk, and whether board gender diversity acts as a moderating buffer to mitigate excessive financial performance volatility (risk). Anchored on behavioral governance theory, this study employed interaction modeling within a panel data structure and Feasible Generalized Least Squares (FGLS) estimator to conduct the empirical investigation. A sample of forty-five (45) manufacturing firms listed on the Nigerian Exchange Group (NGX) between 2015 and 2024 provided the data which were obtained through purposive non-probability sampling technique. Key among the findings is that CEO power significantly shapes financial performance risk, with board gender diversity acting not as a direct stabilizer, but as a contingent governance mechanism whose impact varies depending on the type of CEO power in question. While CEO structural separation, typically promoted under classical agency theory, appears to heighten financial risk in the Nigerian context, CEO expert power emerges as a risk-reducing force, but such benefits diminish when moderated by gender-diverse boards, suggesting that in rigid, male-dominated governance systems, a gender diverse board can generate friction that disrupts leadership coherence. Based on the outcomes from this study, firm managers are encouraged to focus on building inclusive board cultures, clarify role expectations, and provide meaningful engagement channels for female directors to influence strategic decision-making. Further, this study carefully recommends that key regulators such the Nigerian Securities and Exchange Commission (SEC) and policymakers need to go beyond mandating quotas towards investing in board training, capacity building, and governance reforms that encourage collaborative, not confrontational, board-CEO dynamics, especially in an industry as volatile and capital-intensive as manufacturing.