CORPORATE GOVERNANCE AND CASH HOLDING IN NIGERIAN LISTED COMPANIES

Peter Okoeguale IBADIN () and Nosakhare Ogbomo ()
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Peter Okoeguale IBADIN: Department of Accounting,, Postal: University of Benin, Edo State, Nigeria,, https://journal.citn.org/
Nosakhare Ogbomo: Audit Department, Postal: University of Benin Teaching Hospital, Edo State, Nigeria, https://journal.citn.org/

Journal of Taxation and Economic Development, 2021, vol. 20, issue 1, 34-48

Abstract: This study examined corporate governance and cash holdings in Nigeria. To realize this general objective, a sample of one hundred and twenty-seven (127) companies, determined with the use of Yamane’s (1967) sampling size technique, was used and drawn from the Nigeria Stock Exchange (NSE), the selection of which was made through the simple random sampling to allow every listed firm, the equal chance of being selected. The NSE became the focal point of this study because of the assumption that the Stock Market represents the ‘economic hub’ of the nation. Specifically, the study evaluated four independent variables of corporate governance as well as two (2) control variables and a dependent variable of Cash Holding (CASH). The corporate governance variables were Board Size (BSZE), Audit Committee Size (ADC), Board Meetings (BODMET), Board Independence (BIND). The control variables were Leverage (LEV) and Firm Age (AGE). The CASH was regressed on the variables of BSZE, BIND, BODMET and ACS using a multiple regression technique, comprising a total of 1016 observations in eight years, 2009 to 2016. The outcome of the data analyses involved the use of descriptive statistics, correlation matrix, diagnostic tests and regression estimations. The findings revealed that Audit Committee Size (ADC) had a significant relationship with CASH in publicly listed companies in Nigeria. Besides, BODMET and CASH were found to have positive relationships and were statistically significant. It was, therefore, suggested that the boards of companies should sustain their meetings regularly to constantly have a review of the managers’ operational and timely business decisions that impinge on the cash holding related transactions. In addition, the Audit Committee Size of the firm should be sustained and further strengthened through some incentives to keep in check any possible drain on cash holding.

Keywords: Corporate Governance Variables; Cash Holding; Nigeria (search for similar items in EconPapers)
JEL-codes: G30 G34 (search for similar items in EconPapers)
Date: 2021
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