Corporate governance and corporate performance in selected companies in Nigeria

Chinwuba A. Okafor and Peter Okoeguale Ibadin

Afro-Asian Journal of Finance and Accounting, 2011, vol. 2, issue 4, 333-348

Abstract: This paper evaluates corporate governance variables (CGVs) and corporate performance (CP) in Nigerian listed companies. In specific terms, the paper examines CGVs that affect CP, proxied by return on assets (ROA), profit margin (PM) as used in literature but extended to include return on equity (ROE). We used 50 listed companies that cut across the Nigerian Stock Exchange market. We obtained the CGVs of board size (BOS), board composition (BOC), board ownership (BOO) chief executive status (CES) and audit committee independence (ACI) with corporate governance disclosure (CGD) and enterprise risk management disclosure (RMD) added to our model. Using the ordinary least square (OLS) regression, findings revealed that CGD and RMD are positively and significantly related to ROA and PM. It is suggested, on account of these findings, that there should be sustenance of the current corporate policies profile on CGD and RMD as they positively affect CP; while corporate boards, as strategic policy makers should note with caution the CGVs with negative relationships with CP. Such caution is required in order to redirect and refocus policies which could minimise the negative impact of such CGVs on CP.

Keywords: corporate governance; corporate performance proxies; Nigeria; return on assets; profit margin; return on equity; board size; board composition; board ownership; chief executive status; audit committee independence; enterprise risk management; boards of directors. (search for similar items in EconPapers)
Date: 2011
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