Corporate governance, a risk management tool for enhancing organizational performance: Study of Nigeria Stock Exchange(NSE)listed companies

Olajide Solomon Fadun
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Olajide Solomon Fadun: PhD., Department of Actuarial Science and Insurance,Faculty of Management Sciences,University of Lagos, Akoka Lagos

International Journal of Finance & Banking Studies, 2017, vol. 6, issue 4, 12-27

Abstract: Corporate governance is relevant in both developed and emerging economies. The study viewed corporate governance as a risk management tool for enhancing organisations performance and protection of stakeholders’ interest. The study investigated the impact of corporate governance on organizationalperformance, using thirty (30) Nigeria Stock Exchange (NSE) listed companies in 2016. The study focused on three corporate governance variables (i.e., Board Size, Board Independence, CEO Duality/Tenure); and two performance variables -Returns on Asset (ROA) and Returns on Equity (ROE). Secondary data, extracted from published annual reports of selected companies and NSE website, was used for the study. The findings revealed a positive correlation between board size,independence directors,and performance variables; but, showed a negative correlation between CEO tenure and performance variables. The results showed that the number of directors was not positively related to performance in terms of ROA; but, it revealeda positivecorrelation between board size and performance in terms of ROE. It revealed that the correlation between CEO tenure and performance variables (ROA and ROE) was negative. It also showed that CEO Duality hasa positive correlation with ROA, and negative relationship with ROE. The findings revealed that adoption of sound corporate governance practices by listed companies can improve their performances. The underlining conclusion is that organisations would benefit from sound corporate governance practices by way of increased investment from investorsand reduced capital cost. Shareholders confidence and wealth will also be improved; and the nation’s economy will benefit by way of improved GDP.

Keywords: Corporate governance; Organisational performance; Risk management; Nigeria (search for similar items in EconPapers)
Date: 2017
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