MODERATING EFFECTS OF BOARD EQUITY OWNERSHIP ON THE RELATIONSHIP BETWEEN ENTERPRISE RISK MANAGEMENT, REGULATORY COMPLIANCE AND FIRM PERFORMANCE: EVIDENCE FROM NIGERIA

Risk management has become central to the financial sector development of any economy. The collapses of world leading financial institutions in 2008/2009 have raised questions about the role of risk management and compliance with regulatory provisions in shielding firms against failure. Also, the post adverse effects of the global economic meltdown have continued to undermine financial institution performance, Nigeria inclusive. The aim of this study is to examine the moderating effect of Board Equity Ownership on the relationship between ERM framework implementation, regulatory compliance and the non-financial performance of financial institutions in Nigeria. The sample of the study consists of 163 financial institutions in Nigeria. We collected data from the chief risk officers and other top level managers. The study utilized PLS-SEM path modelling with the help of SmartPLS 2.0 software to test the research framework. The findings revealed that ERM framework implementation and regulatory compliance have significant positive effects on the non-financial performance. Also, the study supported the third hypothesis that BEO strengthens the positive relationship between ERM framework adoption and the firm non-financial performance. In the case of compliance, the interaction effect (BEO*COP) did not influence the firm non-financial performance. The study recommended the need for regulatory agencies to encourage board equity ownership but with a caveat to prevent interest entrenchment that may lead to abuse.