THE IMPACT OF CORPORATE RISK GOVERNANCE AND INVESTMENT DECISION ON ASSET AND EQUITY RETURNS OF NIGERIAN NON-LIFE INSURANCE FIRMS
Keywords:
Risk Management, Investment Practices, Financial Performance, Non-Life Insurance, Nigeria, Panel Regression
Abstract
This study examines the impact of risk management and investment practices on the financial performance of non-life insurance companies in Nigeria, using a panel data set of ten selected firms from 2009 to 2022. Employing descriptive statistics, unit root tests, correlation analysis, and panel regression models, the study investigates the relationships between risk management practices (RM), investment practices (IP), and key financial performance indicators, namely Return on Assets (ROA) and Return on Equity (ROE). The results indicate that risk management practices do not have a statistically significant effect on either ROA or ROE, while investment practices are significantly negatively related to ROA, highlighting the potential risks associated with aggressive investment strategies. These findings underscore the need for context-specific risk governance and prudent investment policies within the Nigerian insurance sector to enhance financial stability and performance. The study contributes to the understanding of financial performance determinants in emerging markets and offers policy implications for regulators and insurance firms aiming to strengthen operational efficiency and shareholder value.
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References
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Adegoke, A. K. (2025). Risk management committee attributes and financial performance of listed financial service firms in Nigeria. Fuoye Journal of Finance and Accounting, 7(1), 1–15.
Adekoya, O. D., & Oboh, C. S. (2021). Risk management practices and firm performance in turbulent environments: Evidence from Nigeria. Journal of Accounting in Emerging Economies, 11(4), 650–668.
Ajayi, S. O. (2023). Insurance penetration and financial sector development in Nigeria: Challenges and prospects. African Journal of Economic Policy, 30(1), 115–134.
Akinlo, O., & Apanisile, O. T. (2020). Relationship between risk management and the financial performance of insurance firms in Nigeria. African Journal of Economic and Management Studies, 11(3), 451–465.
Alhassan, A. L., & Fiador, V. O. (2022). Investment behaviour and profitability of insurance companies in Africa. International Journal of Emerging Markets, 17(6), 1263–1284.
Anyanwu, J. C., & Onyekwena, C. (2020). Enhancing financial intermediation in Africa: The role of insurance markets. Journal of Development Perspectives, 34(2), 67–84.
Ariff, M., Ahmad, N., & Showket, A. (2016). Investment strategies and financial performance of insurance firms: Evidence from emerging markets. Emerging Markets Review, 27, 1–18.
Aseinimieyeofori, P. A. (2022). Relationship between non-current assets investment and financial performance of listed insurance companies in Nigeria. Advanced Journal of Accounting, Management and Marketing, 8(2), 3–9.
Ayeni, E. (2022). The dynamics of uncertainty, macroeconomic variables, and financial performance in Nigeria. ScienceDirect.
Baltagi, B. H. (2013). Econometric analysis of panel data (5th ed.). Wiley.
Ezekiel, A. A., Olorunfemi, D., & Salami, A. (2023). Enterprise risk management and financial sustainability of insurance companies in Nigeria. Journal of Risk Finance, 24(1), 45–61.
Florio, C., & Leoni, G. (2017). Enterprise risk management and firm performance: The Italian case. The British Accounting Review, 49, 56–74.
González, L. O., Durán Santomil, P., & Tamayo Herrera, A. (2020). The effect of Enterprise Risk Management on the risk and the performance of Spanish listed companies. European Research on Management and Business Economics, 26, 111–120.
Horvey, S. S., & Odei-Mensah, J. (2024). Enterprise risk management and performance of South African insurers: The moderating role of corporate governance. Risk Management (Palgrave / Springer).
Iwuoha, J. N. (2021). A longitudinal study on the financial performance of life insurance companies in Nigeria: The role of claims management. Nigerian Journal of Business and Insurance, 7(3), 110–125.
Jurdi, D. J., & AlGhnaimat, S. M. (2021). The effects of ERM adoption on European insurance firms’ performance and risks. Journal of Risk and Financial Management, 14(11), 554.
Kanu, C., & Okoro, G. (2021). Risk management adoption and firm performance in emerging markets: Evidence from Nigeria. Journal of African Business, 22(4), 501–518.
Kiptoo, I. K., Kariuki, S. N., & Ocharo, K. N. (2021). Risk management and financial performance of insurance firms in Kenya. Cogent Business & Management, 8(1), Article 1997246.
Mutua, M., Waweru, N., & Njuguna, N. (2023). Risk management practices and financial performance of non-life business in Nigeria. Eksu Journal of Banking and Financial Issues, 11(1), 230–245.
NAICOM (2024). Annual report and financial statements. National Insurance Commission, Nigeria.
Ogundele, O. S. (2025). Risk management practices and financial performance of Nigerian commercial banks. MDPI.
Okonkwo, O., & Eze, O. R. (2020). Insurance services, risk management and economic resilience in Nigeria. African Development Review, 32(S1), S100–S115.
Olayungbo, D. O., & Akinleye, G. T. (2021). Financial performance and risk-taking behaviour of Nigerian insurers. Cogent Economics & Finance, 9(1), 1943259.
Onifade, S. T., Alola, A. A., & Alola, U. V. (2022). COVID-19 pandemic and economic resilience in Africa: The role of financial institutions. Journal of Policy Modeling, 44(3), 599–614.
Widianto, D., Arief, M., Hamsal, M., & Elidjen, E. (2024). Actuarial risk management practices and firm performance: The mediating role of e-service innovation. Journal of Risk and Financial Management, 17(5), 204.
Yakubu, M., & Abubakar, S. (2024). Investment efficiency and financial performance of non-life insurance firms in Nigeria. Journal of Financial Regulation and Compliance, 32(2), 214–229.
Published
2024-04-30
How to Cite
Muritala, T. (2024). THE IMPACT OF CORPORATE RISK GOVERNANCE AND INVESTMENT DECISION ON ASSET AND EQUITY RETURNS OF NIGERIAN NON-LIFE INSURANCE FIRMS. J-MACC : Journal of Management and Accounting, 7(1), 154-168. https://doi.org/https://doi.org/10.52166/j-macc.v7i1.11061
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