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The study was aimed at investigating the impact of corporate governance on risk disclosure. The survey research was used in this study to sample the opinion of respondents. This method involved random selection of respondent who were administered with questionnaires. The target population of the study comprised staff of selected banks in Lagos state. The questionnaire administered was one hundred and ten (110) copies and one hundred copies retrieved which constitute the sample size. The descriptive and analytical approach was adopted using Chi-square to test and analyze the hypotheses earlier stated. The findings revealed that there is a significant impact of corporate governance on risk disclosure and that there is a significant relationship between corporate governance and risk disclosure. It was therefore concluded from the findings that the presence of audit committee, board size and board independence have a positive and significant influence on risk disclosures. However, the level of risk disclosures is negatively affected by the board size. It was recommended that for organizations to increase their level of risk disclosures there is a need to strengthen their corporate governance mechanisms.





As corporate risk management continues to evolve globally to embrace several aspects of business operations and activities, corporate governance and corporate risk management are increasingly intertwined thus highlighting the importance of interdependencies and mutual impacts of corporate governance choice on overall risk management strategies and disclosures. In other words, enterprise wide risk management is a natural and key component of corporate governance. While several regulatory changes have been implemented recently much of the relevant information disclosed by corporations remains voluntary to a great extent. Risk disclosure is no exception and recent governance regulations and guidance seem to offer research opportunities to first document firms’ responses to these regulations and then examine any changes in disclosure behaviour.

Corporate Governance (CG) can protect stakeholders’ interest by introducing and strengthening business regulations which enhance accountability, integrity and transparency, ultimately, this can rationalize the decision-making process as well as mitigating the agency problem between the management and the shareholders. The Board of directors is one of the most powerful corporate governance mechanisms to oversee a firm’s progress, enhance the quality of disclosure by monitoring and controlling the management’s activities and increasing a company’s alignment with its stakeholders (Beekes et al., 2014). From a macro level perspective, the boards of directors are to perform multiple functions by several means of its decisions and control system (Fama and Jensen, 2013) as to safeguard the public interest; guarantee stakeholders’ protection; and ensure transparency and compliance with business laws. Moreover, the board of directors is to manage the risk by sending good signals about a company’s financial performance and, thereby, increasing its legitimacy (Oliveira et al., 2011). Thus, the reliance on the existence of an efficient board of directors can balance between a company’s returns and risks. Consequently, facilitating the process of an effective supervision for the board of directors can benefit entities from their resources that are being managed efficiently (Al Attar, 2016).

The composition of board of directors can enhance the public confidence, reduce the information asymmetry between market participants, mitigate risks and enhance investment decision making (Al-Maghzom, 2016; Alsawalqa, 2014; Linsley and Shrives, 2016; Alkurdi et al., 2017). Further, prior research stressed the importance of risk disclosure for both corporations and investors. For corporations, risk disclosure provides great benefits in managing and reducing the cost of capital and, hence, increasing capital market activities and reducing the possibility of financial failure. These advantages can reduce the cost of external finance, generate trust and gain social legitimacy and improve a company’s stewardship (Linsley and Shrives, 2016; Kothari et al., 2019). On the other hand, risk disclosure can benefit investors by meeting their needs in assessing a company’s financial performance, reducing their uncertainty about its future cash flows and improving the accuracy of security price forecasts (Hung & Subramanyam, 2017), hence, capital investment decisions is enhanced (Cabedo and Tirado, 2014; Miihkinen, 2013).

The current study examines the role of corporate governance mechanisms in corporate risk disclosure for Nigerian banks. This work is motivated by Al-Maghzom et al. (2016) recent review which suggested that the relationship between corporate governance and corporate risk disclosure is determined by some corporate governance  techniques including, the audit committee, board size, firm size and profitability. The choice of the banking sector as the sample is based on some rationales. First, Linsley & Shrives (2016) indicated that banks played a crucial role in a country’s business and economy; it is a high risk bearing sector that heavily relies on trust, hence, prior to the decision-making, investors, depositors, and business partners necessitate detailed information about risk measurement and management. Therefore, transparency and disclosure are important ingredients of the banking sector stability. The study is conducted in Nigeria as a developing country with an emerging capital market that not only has a good potential for economic growth but, also, deals with serious political and economic risks.


There seems to be some elements of doubt if the governance of corporate organizations is really effective considering the rate of bankruptcy and demise of large corporations all over the world, both in Nigeria and foreign countries (Inam 2016). In recent times, the world has witnessed the failure of large corporations; in particular, the Nigerian banking sector is currently experiencing insider abuses of reckless granting of credit facilities running into several billions of naira without adequate security. This is contrary to accepted practice which has been attributed to large scale fraud by directors in connivance with auditors. Also identified by (Mehra 2015) is the problem of window dressing (eye-service) by the directors who are aided by the auditors, as well as the issue of negligence and misfeasance on the part of the auditors when auditing the financial statement of organizations which can be attributed to the lack of independence of the auditors. One will wonder at what was really wrong when a bank which has been declaring huge amount of profits and has been declaring dividends to shareholders is suddenly declared bankrupt (Mehra 2015). The study of Milgrom (2011) and Grossman (2011) concluded that if the firm can make credible disclosures about its value to uninformed investors, in equilibrium the firm will disclose all of its information regardless of how well or bad the news. Many recent studies have hypothesized that firms’ voluntary disclosure choices are aimed at controlling the interest conflicts among shareholders, debt holders, and management (Holthausen & Leftwich, 2013; Watts & Zimmerman, 2016). It is meant that the extent of these interest conflicts, hence the incentives behind disclosure choices vary with certain firm characteristics (Chow & WongBoren, 2017).

The inability of a financial institution in Nigeria to maintain appropriate risk disclosure will result in failures or financial crisis irrespective of their strong earnings, capital base and the quality of its assets (Akhtar, 2017). It therefore, becomes imperative for financial institutions in Nigeria to put up measures that will help them to deal with the challenges that will arise due to fluctuations in monetary policy. It is expected that good corporate governance mechanisms such as board committees among others will positively influence the sector’s development and also plays a significant role in reducing their risk through better channelling of money circulation and other financial transactions. It is against this backdrop that the study seeks to determine the impact of corporate governance on risk disclosure of banks in Nigeria.


The major purpose of this study is to examine the impact of corporate governance on risk disclosure. Other general objectives of the study are:

To examine the influence of audit committee meetings on risk disclosure
To examines the influence of board size on risk disclosure
To examine how the impact of corporate governance on risk disclosure.
To examine the influence of board independence on risk disclosure
To examine the relationship between corporate governance and risk disclosure.
To examine the problems of good corporate governance in Nigerian firms.


How is the influence of audit committee meetings on risk disclosure?
How does board size influences risk disclosure in Nigerian Banks?
What is the impact of corporate governance on risk disclosure?
What is the influence of board independence on risk disclosure?
What is the relationship between corporate governance and risk disclosure?
What are the problems of good corporate governance in a business firm?


Hypothesis 1

H0:There is no impact of corporate governance on risk disclosure.

H1:There is a significant impact of corporate governance on risk disclosure.

Hypothesis 2

H0:There is no significant relationship between corporate governance and risk disclosure.

H1:There is a significant relationship between corporate governance and risk disclosure.


This research dwells on the use of risk disclosure on the quality of financial statements particularly within the context of banking sector in Nigeria. The findings of this research are expected to contribute to existing body of knowledge. Practicing auditors in Nigeria are anticipated to become more informed of the intricacies surrounding risk disclosure. The academic community will also benefit enormously from the outcome of this research which will serve as a reference materials to other researchers who may want to carry out more research on this or related topic. The study would broaden the researcher knowledge on the subject


The study is based on the impact of corporate governance on risk disclosure, a case study of banks in Lagos state.


Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.


Corporate Governance: Is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place.

Risk Disclosure: Is the communication of information concerning firm’s strategies, operations, and other external factors that have the potential to affect expected results.

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