Corporate Governance and Financial Performance of Listed Financial Service Companies in Nigeria

LAWAL-ADEDOYIN, Bukola Bose (2022) Corporate Governance and Financial Performance of Listed Financial Service Companies in Nigeria. Masters thesis, Landmark University, Omu Aran, Kwara State.

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Abstract

Over the years extant literature have examined the impact of corporate governance proxy by Board size, board composition and audit committee on the financial performance of firms with mixed results. With good corporate governance mechanism, firm’s financial performance is expected to be enhanced as it improves shareholders wealth. However, evidence abound to show the contrary. A major consequence of corporate governance failure, is weakened firm’s potential, poor financial performance and exposure to fraud. This study examines the effect of corporate governance on the financial performance of listed financial companies in Nigeria between period of 2010 and 2020. The study employed board size and composition as measures for board of directors, audit committee size and expertise as measures for audit committee while return on equity was employed as measure for financial performance. The study utilized secondary data collected from the annual report and account of thirty two (32) samples listed companies for an eleven (11) years (2010-2020). The sample of the companies was arrived at using purposive sampling technique in which all the elements of the population were used for the study. The data were analysed using descriptive statistics and multiple regression analysis with the aid of SPSS 23 version were conducted to validate the results. The results revealed that there is positive significant relationship between board size, board composition, audit committee expertise and negative but significant relationship between audit committee and return on equity of financial service firms in Nigeria. The study concludes that board size, composition and audit committee expertise have effect on firm performance of financial service listed firms in Nigeria. The study therefore, recommends that, in order to eradicate the problem of fraud and misleading of financial statements, the selection of qualified candidates to audit committees should be prioritized, companies should consider the ratio of executive directors to non-executive directors to achieve performance. Also, individuals with accounting and financial knowledge, competence, experience, and skills should be appointed to audit committees.

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