An Assessment of Corporate Governance and Firm Performance: Empirical Evidence From Selected Listed Companies in Nigeria
CHAPTER ONE
Research Objectives
To determine the effect of corporate governance on the performance of firms listed on the NSE.
CHAPTER TWO
LITERATURE REVIEW
Introduction
The theories that help in the understanding of the theory of corporate governance as a concept, corporate governance structures and the empirical literature on corporate governance effect on financial health are discussed in this chapter. The importance of this section is to identify the potential knowledge gaps on the studies already conducted on corporate governance structures and financial performance as the main variables.
Theoretical Foundation
Literature review basically identifies and examines the work done by other researchers and scholars concerning the impact of corporate governance on the banks’ financial health. This review provided a detailed knowledge of what has been done and provided a platform upon which the findings were interpreted and also to overcome the previous studies’ limitations. The following section described and discussed the different theories such as Stakeholder and Agency Theory.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter contains facts about the research, population and sample that was selected for the study. Data collection, data analysis and presentation criteria that was employed in the study are highlighted in this chapter.
CHAPTER FOUR
DATA ANALYIS, FINDINGS AND DISCUSSIONS
Introduction
The chapter presents the analysis, findings and discusions on the data collected in relation to the effect of corporate governance on the performance of firms listed on the Nigerian Stock Exchange. The primary data was acquired from the senior level managers and board of directors of all listed firms by use of using semi structured questionaires.The data was analysed using descriptive methods such as frequencies, standard deviations, means and percentages and then presented using tables and figures. SPSS was used to run the regression analysis to ascertain the impact of corporate governance on organisational performance.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
Introduction
The study’s summary, conclusion and recommendations are presented in this chapter. The study’s objective was to establish the impact of corporate governance on the performance of firms at the NSE listing. The chapter also presents recommendations for practice and policy as well as suggestions for future studies.
Summary of Findings
The study’s objective was to explore the effect of corporate governance on the performance of firms listed in the NSE . In order to establish the effect of corporate governance on the performance, regression analysis using SPSS. The components of corporate governance that were considered are: board diversity, board size, number of committees and number of meetings and board independence.
The study established that smaller boards improve the performance of the firm although larger size boards are more capable in the provision of resources.. The study further established that boards of firms listed at the NSE are diverse in terms of gender and that the appointment of board members considers a mix of skills required in the stewardship of the organization such as education and industry experience. The study also established that the boards of firms listed at the NSE are independent since there were more non- executive than the Executive and therefore adds value to the firms since they have attachment to the firms. Further, the study found out that the existence of independent committees and the number of board meetings held annually enhances the organization’s financial performance .
Regression findings revealed a strong association (R= 0.723) exists between corporate governance and financial performance with corporate governance accounting for 52.3% of the total variance in firms performance. Further, the study established that corporate governance components.
Conclusion
It can be concluded from the findings that a strong association exists between corporate governance and the firm performance of the firms at the NSE listing. Corporate governance accounts for 52.3% of firm performance of the companies at the NSE listing. It also concludes that corporate governance components (board size, board independence, board diversity, number of committees, number of meetings) have positive and strong impact on the performance of listed firms.
Policy Recommendations
The study found out that board diversity, number of committees and number of meetings affects firm performance positively. This study therefore recommends that the shareholders should promote board diversity, promote independence of audit committees and increase the frequency of the board meetings as this translate to improved firm performance. The study also established that number of non-executive (independent) directors and the affects firm performance of listed companies positively. The study therefore recommends that the shareholders of listed firms should keep the number of independent directors higher than the insiders as this allow them to make appropriate and non-partisan decisions.
Limitations of the Study
Company information is confidential and proprietary. Most of the respondents did not want to give out information fearing that it might be used to create a negative perception about their banks. This was handled by the researcher through giving assurance to them that the information would be handled with confidence and only be utilized for the intended purpose.
The accuracy of the results of this study was largely based on the respondents’ opinions about the effect of corporate governance on the performance of firms at the NSE listing. The researchers seeking clarifications from the respondents on any weird responses. Lastly, the study faced the challenge resources and time thus limiting the scope of the study. This led to delays in the delivery and picking of the questionnaires.
Suggestions for Future Studies
Arising from this study, studies on the effect of corporate governance on the performance of firm listed at the NSE should be explored. In future, other determinants of the firm performance should be investigated as corporate governance mechanisms could only account 52.3% of the total variance in firms’ performance. In future, a research aimed at evaluating how the quality of corporate governance influence the satisfaction of the key stakeholders for firms listed at the NSE should be conducted.
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