SOURCE:

Faculty: Management Sciences
Department: Banking And Finance

CONTRIBUTORS:

Esan B. Aisagbonbuomwan
Okaro C. S.
Adigwe P. K.

ABSTRACT:

This study examined the effect of corporate governance on financial performance of selected deposit money banks quoted on the Nigerian Stock Exchange. Literature provides conflicting results on the relationship between corporate governance practice and firm financial performance with some studies showing a positive relationship, some negative and still others showing that there is no relationship between the two variables, hence the need for further study in this subject area. Specifically, this study determined the effect of board ownership, audit committee, independence, age and block shareholding on return on assets, equity, net income growth, earning per share and net profit margin. Secondary data for the period 2005 to 2017 were obtained from financial statements and footnotes of the sampled banks. The study applied a longitudinal/panel research design and the hypotheses were tested using the granger causality test. The findings revealed that age of the board of directors has significant effects on return on assets; age of the board of directors and block shareholding have significant effects on return on equity, earnings per share and net profit margin of deposit money banks in Nigeria. The result revealed also that there is a negative relationship between board independence and return on assets of deposit money banks in Nigeria. In view of the findings, members of the board should not be encouraged to have large shareholding because it contributes negatively to performance. The holding of block shares of the banks by individuals, institutional investors or agencies should be discouraged on the inference of its negative effect on performance.