Corporate governance as a mechanism for measuring financial performance of banks in Nigeria
The issue revolving around corporate governance and financial performance has always been an essential and critical element for banking sector in Nigeria. Good corporate governance practices are regarded as important in reducing risk for investors, attracting investment capital and improving perfor...
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| Format: | Thesis |
| Language: | eng eng |
| Published: |
2016
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| Subjects: | |
| Online Access: | https://etd.uum.edu.my/6186/1/s817183_01.pdf https://etd.uum.edu.my/6186/2/s817183_02.pdf |
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| Summary: | The issue revolving around corporate governance and financial performance has always
been an essential and critical element for banking sector in Nigeria. Good corporate governance practices are regarded as important in reducing risk for investors, attracting investment capital and improving performance. Precisely, this study investigates the relationship between the corporate governance mechanisms (CEO tenure, board size and
the audit committee size) and return on assets (ROA) was chosen as a measure of financial performance. Moreover, this study used firm size, leverage, bank age and management change as control variables. Furthermore, the research made use of
secondary data obtained from the annual reports of twenty-one (21) banks listed in the Nigeria Stock Exchange for the year 2006 to 2009. The model of this study was theoretically found on the agency theory. In analyzing the data, this study utilized the panel data methodology on 21 banks with 68 observations. Based on the panel data results, the random effect model was used to examine the effect of the predictors on the financial performance measured by ROA. In Nigerian banks, the result indicates that the relationship between CEO tenure and ROA is positively significant. This study further found that the relationship between board size and ROA is positively insignificant. In
addition to that, this study found that the relationship between audit committee size with
ROA is negatively insignificant. Also, this study found that the relationship between firm size and ROA is negatively significant while the relationship between leverage, bank age and ROA were found to be positively significant. Finally, the outcome of the relationship between management change and ROA is positively insignificant. Besides providing suggestions for future research work, this study provides several recommendations for
regulators and the Nigerian banking industry. |
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