International Journal of Advances in Engineering and Management (IJAEM) Volume 4, Issue 3 Mar 2022, pp: 108-116 www.ijaem.net ISSN: 2395-5252 DOI: 10.35629/5252-0403108116 Impact Factor value 7.429 | ISO 9001: 2008 Certified Journal Page 108 The Impact of Board Diversity on earnings Management of Aforementioned Non- Financial Companies in Nigeria Dr. Ugochukwu Paul Orajaka Department of Entrepreneurship studies, Chukwuemeka Odumegwu Ojukwu University, Igbariam Campus --------------------------------------------------------------------------------------------------------------------------------------- Submitted: 01-03-2022 Revised: 07-03-2022 Accepted: 10-03-2022 ---------------------------------------------------------------------------------------------------------------- ABSTRACT The focus of this study is to examine the relationship between corporate board diversity (foreign board membership diversity) and earnings management of non-financial companies in Nigeria. The literature revealed that there is a knowledge gap on the study of the relationship between foreign board membership diversity and earnings management of non-financial companies. The population used is forty eight (48) while the final sample size of this study is twenty five (25). The statistical tools used for the study are descriptive statistics, hausman effect and panel data multiple regressions (fixed and random effect regression) was used to analyze the causal relationship between foreign board membership diversity and earnings management. The result shows a negative and significant relationship exists between foreign board membership diversity and earnings management among all the non-financial firms in Nigeria. Earnings management is less prevalent in firms with foreign member in their board of directors and corporate boards comprising of more independent directors and more female directors whereas earnings management is more prevalent and more severe when the board comprises of more directors with more stock holdings or ownership. The result is recommended for academic purposes and to companies/firms to support their decision making system. Keywords: Foreign Board Membership Diversity; Earnings Management; Non-Finance; Firms; corporate governance; Regression I. BACKGROUND TO THE STUDY Board diversity as an aspect of corporate governance has gained attraction among researchers and practitioners of corporate finance. Although much research has been devoted to corporate governance, few studies exist on board diversity especially on its relationship with earnings management across countries. The current study sought to examine the effect of board diversity on earnings management among listed non-financial firms. Roles of boards of directors have been major pillars of corporate governance over the last two decades (Tricker & Tricker, 2015). A proportion of scholars express their views that different board of directors affect organizational performance resulting indifferent orientations. Board members’ gender, age, education and experience in the industry are some of the most common attributes of boards of directors (Letting, Aosa & Machuki, 2012). There is evidence of managers engaging in earnings management through accrual manipulation which has been shown in many different contexts, for many different accruals, and in response to many managerial incentives (Fan, Barua, Cready & Thomas: 2010). In addition, accrual management involves potential accounting fraud that brings about litigation risk to the firm.A second channel through which earnings could be manipulated is real activities management, such as providing discounts to customers to temporarily increase sales and cutting research and development expense (Gunny, 2005; Roychowdhury, 2006). In the case of real activities management, managers can offer temporary price discounts to increase sales, cut discretionary expenditures such as research and development and advertising, or overproduce to reduce cost of goods sold (Roychowdhury, 2006). However, real activities manipulation sacrifices firms’ future economic benefits, even though this approach introduces less litigation risk to the firm. It was as a result of looking for a way to manage earnings, that board of directors as an organ of the firm is instituted to ensure good corporate governance. OECD (2004) noted that the board of directors is a legal requirement in most countries of the world and one of the essential prerequisites of good