Financial performance of Nigerian deposit money banks and corporate governance
-
DOIhttp://dx.doi.org/10.21511/bbs.19(2).2024.12
-
Article InfoVolume 19 2024, Issue #2, pp. 152-160
- 292 Views
-
95 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Corporate governance has become a significant policy issue in Nigeria, especially with many developments such as the volatility of corporations on the Nigerian Exchange and the rise in the population of stockholders, which have increased the relevance of corporate governance measures. This study examined the nexus between corporate governance and Nigerian Deposit Money Banks’ (NDMBs) financial performances using a period from 2012 to 2019. Using a judgmental sampling technique, out of 25 NDMRs, 15 NDMRs were selected as a sample size. Secondary data were extracted from the annual reports of the selected banks. Descriptive research design and regression analysis were used to analyze the data. The findings offer empirical evidence to refute the five null hypotheses and found that the financial performance of NDMBs as measured by Tobin Q and corporate governance proxies (i.e. board meetings, the board size, CEO duality, audit committee independence, and board independence) is statistically related. This study found that the nexus between Nigerian deposit money banks’ financial performance and CEO duality is negative and significant. The nexus between Nigerian deposit money banks’ financial performance and board independence is negative and significant. Nigerian deposit money banks’ financial performance and audit committee independence have a positive and significant nexus. The nexus between Nigerian deposit money banks’ financial performance and board size is positive and significant. The nexus between Nigerian deposit money banks’ performance and board meetings is positive and significant. This study concluded that corporate governance and financial performance of NDMBs are related.
Acknowledgment
Whichever contributors to this publication, both non-researchers and scholars, are much acknowledged.
- Keywords
-
JEL Classification (Paper profile tab)G20, G21, M41
-
References44
-
Tables2
-
Figures0
-
- Table 1. Descriptive statistics
- Table 2. Regression analysis
-
- Abdullah, S. N. (2004). Board composition, CEO duality and performance among Malaysian Listed Companies. Corporate Governance, 4(4), 47-61.
- Abor, J. (2007). Corporate governance and financing decisions of Ghanaian listed firms: Corporate Governance, 7(1), 83-92.
- Bairathi, V. (2009). Corporate governance: A suggestive code. International Research Journal, 11(6), 753-754.
- Bassey, G. E., & Moses, C. E. (2015). Bank profitability and liquidity management: A case of selected Nigerian deposit money banks. International Journal of Economics, Commerce and Management, 3(4), 1-24.
- Bathula, H. (2008). Board characteristics and firm performance: Evidence from New Zealand (Doctoral Thesis). Auckland University of Technology.
- Berger, A. N., & Di Patti, E. B. (2006). Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry. Journal of Banking & Finance, 30(4), 1065-1102.
- Berle, A. A., & Means, G. C. (1933). The Modern Corporation and Private Property. New York: Macmillan Co.
- Carcello, J. J. V, Hollingsworth, C. C. W., Klein, A., & Neal, T. L. (2006). Audit Committee Financial Expertise, Competing Corporate Governance Mechanisms, and Earnings Management. Delaware: SSRN Electronic Journal.
- Chauhan, Y., Lakshmi, K. R., & Dey, D. K. (2016). Corporate governance practices, self-dealings, and firm performance: Evidence from India. Journal of Contemporary Accounting & Economics, 12(3), 274-289.
- Chi, T. (2009). Corporate governance: CII (Council of Institutional Investors) urges Congress to adopt corporate governance reforms. Corporate Governance Report, 12(1), 4-5.
- Conger, J. A., & Lawler, E. E. (2009). Why your board needs a non-executive chair. In Conger, J. A. (Ed.), Boardroom realities (pp. 51-67). San Francisco: Jossey Bass.
- De Andres, P. A., Azofra, V., & Lopez, F. (2005). Corporate boards in some OECD countries: Size, composition, functioning and effectiveness. Corporate Governance: An International Review, 13(2), 197-210.
- Eisenhardt, K. M. (1989). Agency theory: An assessment and review. The Academy of Management Review, 14(1), 57-74.
- Eluyela, D. F., Akintimehin, O. O., Okere, W., Ozordi, E., Osuma, G. O., Ilogho, S. O., & Oladipo, O. A. (2018). Board meeting frequency and firm performance: examining the nexus in Nigerian deposit money banks. Heliyon, 4(10), e00850.
- Fama, E., & Jensen, M. (1983). Agency Problems and Residual Claims. The Journal of Law & Economics, 26(2), 327-349.
- Freeman, R. E., Wicks, A. C., & Parmar, B. (2004). Stakeholder Theory and “The Corporate Objective Revisited”. Organization Science, 15(3), 364-369.
- Ghabayen, M. A. (2012). Board Characteristics and Firm Performance: Case of Saudi Arabia. International Journal of Accounting and Financial Reporting, 2(2), 168-179.
- Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48(3), 831-80.
- Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
- Kakanda, M. M., Salim, B., & Chandren, S. (2016). Review of the Relationship between Board Attributes and Firm Performance. Asian Journal of Finance & Accounting, 8(1), 168-181.
- Kamardin, H., & Haron, H. (2011). Roles of Board of directors: Monitoring and resource dependency perspectives from Malaysia. International Journal of Economics and accounting, 2(3), 282-306.
- Kiel, G. C., & Nicholson, G. J. (2003). Board Composition and Corporate Performance: How the Australian Experience Informs Contrasting Theories of Corporate Governance. Corporate Governance: An International Review, 11(3), 189-205.
- Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, 33(3), 375-400.
- Klein, G. (1998). Sources of power: How people make decisions. Cambridge, MA: MIT Press.
- Lam, T. Y., & Lee, K. S. (2008). CEO duality and firm performance: evidence from Hong Kong. Corporate Governance, 8(3), 299-316.
- Lasfer, M. A. (2004). On the monitoring role of the board of directors: the case of the adoption of Cadbury recommendations in the U.K. Advances in Financial Economics, 9, 287-326.
- Lipton, M., & Lorsch, J. (1992). A Modest Proposal for Improved Corporate Governance. The Business Lawyer, 48(1), 59-77.
- Mak, Y. T., & Kusnadi, Y. (2005). Size Really Matters: Further Evidence on the Negative Relationship between Board Size and Firm Value. Pacific-Basin Finance Journal, 13(3), 301-318.
- Marn, J. T. K., & Romuald, D. F. (2012). The impact of corporate governance mechanism and corporate performance: a study of listed companies in Malaysia. Journal for the Advancement of Science & Arts, 3(1), 31-45.
- Ntim, C. G., Soobaroyen, T., & Broad, M. (2017). Governance structures, voluntary disclosures and public accountability: The case of UK higher education institutions. Accounting, Auditing and Accountability Journal, 30(1), 65-118.
- Otekunrin, A. O., Fagboro, D. G., Nwanji, T. I., Asamu, F. F., Ajiboye, B. O., & Falaye, A. J. (2019). Performance of deposit money banks and liquidity management in Nigeria. Banks and Bank Systems, 14(3), 152-161.
- Otekunrin, A. O., Kenechukwu, O. P., Eluyela, D. F., John, O. N., & Ibrahim, A. (2022). Do microfinance banks’ activities affect Nigeria’s economic development? Banks and Bank Systems, 17(2), 1-12.
- Otekunrin, A. O., Nwanji, T. I., Eluyela, D., Olowookere, J. K., & Fagboro, D. G. (2020). Capital structure and profitability: The case of Nigerian deposit money banks. Banks and Bank Systems, 15(4), 221-228.
- Owolabi, O. J., Owolabi, B. A., Otekunrin, A., & Kwarbia, J. D (2023). Integrated reporting and investor returns of deposit money banks listed on the Nigerian exchange. Banks and Bank Systems, 18(4), 22-29.
- Pfeffer, J. (1972) Size and Composition of Corporate Boards of Directors: The Organization and Its Environment. Administrative Science Quarterly, 17(2), 218-228.
- Prashar, A., & Gupta, P. (2021). Corporate boards and firm performance: a meta-analytic approach to examine the impact of contextual factors. International Journal of Emerging Markets, 16(7), 1454-1478.
- Ramadan, I. Z., Kilani, Q. A., & Kaddumi, T. A. (2011). Determinants of bank profitability: Evidence from Jordan. International Journal of Academic Research, 3(4), 180-192.
- Rutledge, R. W., Karim, K. E., & Lu, S. (2016). The Effects of Board Independence and CEO Duality on Firm Performance: Evidence from the NASDAQ-100 Index with Controls for Endogeneity. Journal of Applied Business and Economics, 18(2).
- Saat, N. M., Karbhari., Y., Heravi, S., & Nassir, A. (2011). Effective Oversight Roles of Board of Directors: The case of listed firms on Bursa Malaysia. World Review of Business Research, 1(1), 231-245.
- Shleifer, A., & Vishny, W. R. (1997). A Survey of Corporate Governance. Journal of Finance, 52(2), 737-783.
- Stoeberl, P. A., & Sherony, B. C. (1985). Board efficiency and effectiveness. In Mattar, E., & Ball, M. (Eds.), Handbook for Corporate Directors. New York: McGraw-Hill.
- Van Ness, R., Miesing, P., & Kang, J. (2010). Board of director composition and financial performance in a Sarbanes Oxley world. Academy of Business and Economics Journal, 10(5), 56-74.
- Zabri, S. M., Ahmad, K., & Wah, K. K. (2016). Corporate governance practices and firm performance: evidence from top 100 public listed companies in Malaysia. Procedia Economics and Finance, 35, 287-296.
- Zhou, H., Owusu-Ansah, S., & Maggina., A. (2018). Board of directors, audit committee, and firm performance: Evidence from Greece. Journal of International Accounting, Auditing and Taxation, 31(C), 20-36.