Effectiveness of Mandated Approaches to Increasing Board Independence in Achieving Intended Governance Outcomes: Professional Investors’ Perspective

Drawing on interviews with 27 professional investors and proceeding from a resource dependence theoretical lens, this study investigates how professional investors perceive the effectiveness of mandated approaches to increasing board independence in achieving intended governance goals in the Nigerian banking sector. We inductively identify three distinct effectiveness categories for board independence approaches: quixotic, symbolic, and practical. We further unpack seven contextual factors that influence these perceptions, namely person-specific utility; board cronyism; loss of independence over time; disconnection with business realities despite their technical competence; non-executive directors’ (NEDs’) concern for business survival; NEDs’ subservience to the major shareholder; and NEDs’ reputational standing. We provide insights that demonstrate that the mandated approaches to increasing board independence are not universally effective in achieving intended governance goals and must instead be evaluated within their institutional and contextual realities.