Risk Committee Independence and Risk Disclosure: The Moderating Role of Company’s Size

Abstract

This study investigated the relationship between risk committee independence and risk disclosure in listed financial services companies in Nigeria, with a focus on the moderating role of firm size. The study is motivated by persistent corporate governance challenges, weak disclosure practices, and lessons from past financial crises. Specifically, it examines whether independent risk committees enhance transparency and whether firm size strengthens or weakens this effect. Using an ex post facto research design, secondary data were obtained from the annual reports of 34 financial service companies listed on the Nigerian Exchange Group between 2012 and 2022. A disclosure index measured the extent of risk reporting, while risk committee independence served as a predictor, with firm size as the moderator. Panel data were analysed using robust pooled regression after diagnostic tests confirmed non-normality and heteroscedasticity. The findings reveal that risk committee independence has a significant but mixed influence on disclosure, positive in baseline models but negative when firm size is included. Firm size shows a consistent positive effect, with larger firms disclosing more risk information, and significantly moderates the relationship between risk committee independence and disclosure. These results support agency, stakeholder, and signalling theories in explaining governance disclosure dynamics. The study contributes to literature by offering evidence from an emerging economy, emphasizing the role of contextual factors. It recommends that regulators such as the FRC, SEC, and CBN strengthen guidelines on risk committee composition and adopt tiered disclosure requirements based on firm size.