Board Oversight as a Moderator of the Effect of Executive Compensation on Risk-Taking Behaviour of Listed Firms in Nigeria

Executive compensation design and board oversight are central governance mechanisms that shape the risk appetite of corporate executives. This study examines the moderating role of board oversight on the relationship between executive compensation, decomposed into equity-based compensation and bonus compensation, and firm-level risk-taking behaviour among listed firms in Nigeria for the period 2011–2025. Employing an ex-post facto research design and panel regression methodology on an unbalanced panel of 151 listed firms on the Nigerian Exchange Group (NGX), the study adopts fixed effects models validated through the Hausman specification test. The findings reveal that equity-based compensation and bonus compensation both exert a statistically significant positive influence on risk-taking, consistent with agency theory predictions. However, board oversight significantly moderates and attenuates this relationship, suggesting that stronger governance structures constrain excessive managerial risk-taking induced by incentive pay. Firm size exhibits a significant negative relationship with risk-taking, while growth opportunities are positively associated with risk. Industry affiliation also plays a marginal but significant role. These results carry profound implications for corporate governance reform, regulatory design by the Securities and Exchange Commission Nigeria (SEC), and compensation committee practices across Nigerian listed firms. The study contributes to the sparse but growing governance literature within the Sub-Saharan African context and calls for more nuanced, contextually grounded compensation policies.