RISK MANAGEMENT COMMITTEE ATTRIBUTES AND RISK DISCLOSURE OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study examined the effect of risk management committee (RMC) attributes on risk disclosure among quoted deposit money banks in Nigeria. The study aims to assess how specific characteristics of risk management committees, such as committee size (RMCSIZE), independence (RMCIND), financial expertise (RMCFE), and the frequency of meetings (RMCMF), influence the level and quality of risk-related disclosures in the banks' annual reports. Given the critical role of transparency and risk management in the banking sector, particularly in developing economies, understanding these relationships is essential for improving governance practices and regulatory frameworks. An ex-post facto research design was employed, utilizing secondary data derived from the annual reports of the thirteen (13) quoted deposit money banks operating within the Nigerian financial sector over a specified period. The data analysis was conducted using panel regression techniques, which allowed for a detailed examination of the associations between the independent variables (RMC attributes) and the dependent variable (risk management disclosure). The findings reveal that certain RMC attributes significantly impact risk disclosure. Specifically, the study found that RMC independence (RMCIND) and committee size (RMCSIZE) positively influence the extent of risk disclosure, suggesting that more independent and larger committees are better positioned to enhance transparency. On the other hand, financial expertise (RMCFE) showed a negative relationship with risk disclosure, which may indicate complexities in how financial expertise is utilized within the committee. Frequency of meetings (RMCMF) is not found to have a statistically significant impact on risk disclosure. The study is grounded in Agency Theory and Signaling Theory, providing a theoretical framework for understanding the dynamics of risk disclosure. Agency Theory suggests that well-structured committees can mitigate agency problems through better monitoring, while Signaling Theory highlights the role of risk disclosures as signals of firm quality to stakeholders. The findings of this study have important implications for regulators, policymakers, and banking institutions, suggesting that enhancing certain RMC attributes can lead to improved risk transparency and better governance. Consequently, recommendations are made for strengthening regulatory guidelines on RMC composition and practices to ensure more effective risk management and disclosure in the Nigerian banking sector.