Corporate Governance Mechanisms and the Financial Performance of Companies in Nigeria
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All business organizations have vision, mission and organisational objectives, which are
geared towards improved performance and survival thus forming the driving force behind
the decisions made by its management team. The organizational objectives of the company,
however, is what deterimnes the type of structure the company puts in place in an attempt
to achieve the set objectives. Corporate governance has been acliamed to be a major tool for
enhancing corporate image, reduce missapropriation of fund, attract investors as well as
improve the performance of the company. This study however examines the role of
corporate governance mechanisms on the financial performance of listed companies in
Nigeria. Using return on asset (ROA) as a proxy for financial performance, the weighted
fixed effect regression method of analysis was used to determine the type of relationship
that exists between the corporate governance variables and financial performance of
Nigerian companies. The study found that there is a significant positive relationship
between board composition and management ownership with financial performance of
Nigerian companies. There is a significant negative relationship between audit committee
size, block ownership and duality of chairman and ceo position with financial performance
of Nigerian companies. This study therefore recommends that regulators of business
entities in Nigeria should consider the corporate governance variables and their impact on
the financial performance of companies listed in Nigeria as the businesses are major
instruments for improving economic development and attracting foreign investment
Keywords
HF Commerce, HF5601 Accounting, HG Finance