Agency Crisis, and Enterprise Financial Performance among listed Companies in the Nigerian Exchange Group

Atu, Osariemen Samuel (), Atu, Sandra Ese (), Atu, Liberty Etinosa () and Atu, Omimi-Ejoor Osaretin Kingsley ()
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Atu, Osariemen Samuel: Igbinedion University, Postal: Okada,, https://www.afarng.org/mjms/
Atu, Sandra Ese: Ph.D. Accounting Student, Igbinedion University, Okada, Postal: Audit Staff - Atu Omimi-Ejoor Osaretin & Co (Chartered Accountants),, https://www.afarng.org/mjms/
Atu, Liberty Etinosa: M.Sc. Accounting Student, Igbinedion University, Okada, Postal: Audit Trainee - Atu Omimi-Ejoor Osaretin & Co (Chartered, Accountants);,, https://www.afarng.org/mjms/
Atu, Omimi-Ejoor Osaretin Kingsley: Igbinedion University, Postal: Okada,, https://www.afarng.org/mjms/

Multidisciplinary Journal of Management Sciences, 2022, vol. 4, issue 1, 55-74

Abstract: The study examines vertical agency crises, corporate governance and enterprise performance among listed companies in the Nigerian Exchange Group. The study used longitudinal research design; secondary data was sourced from the audited annual statement of thirty six (36) non-financial companies during the period 2015 to 2021. Using the panel estimation technique, random estimation result showed that vertical agency crises appears to have a negative impact (0.125) which is statistically significant (p=0.042) at 5% level. Board independence appeared to have a negative impact (0.004) though not significant at 5% (p=0.902). Board size appeared to have a positive impact (0.005) and it is statistically significant at 5% (p=0.013). Considering the change in profit by 55.4% as a result of vertical agency crises, board independence and board size, the study concludes these explanatory variables are drivers of financial performance of firms in the insurance sector. The study recommends as follows: (i) firms should take measures to align managers' interest with shareholders interest in order to forestall agency crises that could erode financial performance. One way of ensuing convergence of interest is through managers equity ownership; (ii) notwithstanding the insignificant impact board independence has on financial performance, corporate entities should continue to ensure their board of directors has more of non-executive directors. Also, corporate entities should ensure that non-executive members appointed to the board has the needed expertise to function in such capacity rather than being a rubber stamp member; and (iii) the size of the board should be in conformity to the provision of the code that the relative scale of operation and complexities of the corporate entities should be taking into consideration.

Date: 2022
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