Effect of Corporate Governance Mechanisms on Performance of Listed Nigerian Firms (1990-2015)


Faculty: Management Sciences
Department: Banking And Finance


Gbadebo, A. O.
Ibenta, S. N. O.
Okaro, C. S.


The study examined the effect of corporate governance mechanisms on the performance of listed Nigerian firms between 1990 and 2015. Secondary data extracted from the audited financial statements and the Nigerian Security Exchange Factbooks of 43 selected firms were used. Panel regression technique was employed in data analysis using OLS, random effects and fixed effects. Husman test was conducted for the individual firm differences. The study used five dependent variables namely return on assets (ROA), return on equity (ROE), price earnings ratio (PER), Tobin's q (TQ) and labour productivity (LP) while seven independent indicators: board size (BS), outside board directors (OBD), directors’ shareholding (DSH), block holding (BH), independent audit committee (IAC), leverage (L) and firm size (FS) were selected. The outcome reveals mix results as there are three categories of relationships. Firstly board size has a positive significant influence on return on assets, Tobin's q and labour productivity. Secondly, leverage and board size square have a negative impact on return on assets and labour productivity. Thirdly, Directors’ shareholding and independent audit committee have no significant influence on return on asset, return on equity, price earnings ratio, Tobin's q and labour productivity respectively. The contradicting results from this study propose the need for further conceptual reasoning about governance structures and firm performance in developing countries. Replication of governance structures of developed countries by emerging economies including Nigeria without proper consideration of its socio-politico-economic environment would not assist restraint of poor performance. Consequently, the necessity to fine-tune the code of corporate structure to suit the peculiarity of each nation need not be overemphasised. Also, board size should not be more than ten in line with the average obtained from this study which is consistent with the range of between 8 and 15 suggested by the National Code of Corporate Governance (2016).