CORPORATE GOVERNANCE ADOPTION, BOARD PECULIARITIES AND FIRM PERFORMANCE IN NIGERIA
Keywords:
corporate governance, value added intellectual capital, firm performance, Nigeria
Abstract
This study aims to examine the relationship between corporate governanmce adoption, board structures and firm performamce in Nigeria through a sample of 62 non-financial companies in Nigeria over a period of four years. Many corporate governance studies in developed countries have established links between corporate governance and firm performance. However, in developing countries like Nigeria, very little attention has been given to corporate governance and adoption of corporate best practice. Secondary data (annual reports) was sourced from selected sectors and tested through multiple regression analysis with Driscoll-Kraay standard errors. The findings of the study provide empirical evidence that board characteristics and adoption of corporate governance mechanism is significant and positively related to firm performance. This study contributes greatly to the field of corporate governance by checking the impact of adoption of corporate governance code in Nigeria. Board meeting is found to affect performance when meetings are done not to merely fulfill statutory requirements but to discuss material fact that are affecting the firm.
References
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Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance☆. Journal of Financial Economics, 94(2), 291–309. doi:10.1016/j.jfineco.2008.10.007
Adams, R. B., & Mehran, H. (2012). Bank board structure and performance: Evidence for large bank holding companies. Journal of Financial Intermediation, 21(2), 243–267. doi:10.1016/j.jfi.2011.09.002
Adewuyi, A. O., & Olowookere, A. E. (2013). New corporate code and immediate performance change of the Nigerian firms. Corporate Governance: The International Journal of
Business in Society, 13(2), 169–183. doi:10.1108/14720701311316643
Agrawal, A., & Knoeber, C. R. (1996). Firnn Performance and Mechanisms to Control Agency Problems between Managers and Shareholders, 31(3), 377–398.
Akpan, E. O., & Amran, N. A. (2014). Board characteristics and company performance :
Evidence from Nigeria, 2(3), 81–89. doi:10.11648/j.jfa.20140203.17
Al-Matar, E. M., Al-Swidi, A. K., & Bt Fadzil, F. H. (2014). The Effect of Board of Directors Characteristics, Audit Committee Characteristics and Executive Committee Characteristics on Firm Performance in Oman: An Empirical Study. Asian Social Science, 10(11), 149– 171. doi:10.5539/ass.v10n11p149
Bajtelsmit, V. (1999). Gender differences in defined contribution pension decisions. Financial Services Review, 8(1), 1–10. doi:10.1016/S1057-0810(99)00030-X
Bijalwan, J. G., & Madan, P. (2013). Corporate Governance Practices , Transparency and Performance of Indian Companies. IUP Journal of Corporate Governance, 12(3), 46–79.
Bøhren, Ø. (2007). Aligned , informed , and decisive : Characteristics of value-creating boards.
SSRN.
Boyd, C. (1996). Ethics and corporate governance: The issues raised by the Cadbury report in the United Kingdom. Journal of Business Ethics, 15(2), 167–182. doi:10.1007/BF00705585 Brickley, J. A., Coles, J. L., Jarrell, G., Chapman, D., Coles, J., Denis, D., … Zirnmer-, J. (1997).
Leadership structure : Separating the CEO and Chairman of the Board 1. Journal of Corporate Finance, 3(January 1994), 189–220.
Campbell, K., & Mínguez-Vera, A. (2007). Gender Diversity in the Boardroom and Firm Financial Performance. Journal of Business Ethics, 83(3), 435–451. doi:10.1007/s10551- 007-9630-y
Carter, D. a., Simkins, B. J., & Simpson, W. G. (2003). Corporate Governance, Board Diversity, and Firm Value. The Financial Review, 38(1), 33–53. doi:10.1111/1540-6288.00034
Christensen, J., Kent, P., & Stewart, J. (2010). Corporate Governance and Company Performance in Australia. Australian Accounting Review, 20(4), 372–386. doi:10.1111/j.1835-2561.2010.00108.x
Daily, C. M., & Dalton, D. R. (1994). Bankruptcy and Corporate Governance: the Impact of Board Composition and Structure. Academy of Management Journal, 37(6), 1603–1617. doi:10.2307/256801
Davis, G. F., & Cobb, J. A. (2009). Resource Dependence Theory : Past and Future • Resource Dependence Theory : Past and Future Abstract. Research in Socialogy of Organisation, 1– 31.
Dowen, R. J. (2001). board of Director quality and Firm Performance. International Journal of Economics of Business, 2(1), 123–131.
Edogbanya, A., & Kamardin, H. (2014). Adoption of International Financial Reporting Standards in Nigeria: Concepts and Issues. Journal of Advanced Management Science, 2(1), 72–75. doi:10.12720/joams.2.1.72-75
Edogbanya, A., & Kamardin, H. (2015). The Relationship between Audit and Risk Management Committees on Financial Performance of Non-financial Companies in Nigeria : A
Conceptual Review. Mediterranean Journal of Social Sciences, 6(3), 206–211. doi:10.5901/mjss.2015.v6n3p206
Ellstrand, a. E., Tihanyi, L., & Johnson, J. L. (2002). Board Structure and International Political Risk. Academy of Management Journal, 45(4), 769–777. doi:10.2307/3069310
Finegold, D., Benson, G. S., & Hecht, D. (2007). Corporate Boards and Company Performance: review of research in light of recent reforms. Corporate Governance: An International Review, 15(5), 865–878. doi:10.1111/j.1467-8683.2007.00602.x
García-Sánchez, I.-M. (2009). The effectiveness of corporate governance: board structure and business technical efficiency in Spain. Central European Journal of Operations Research, 18(3), 311–339. doi:10.1007/s10100-009-0112-4
Gujarati, D. N. (2004). Basic Econometrics (fouth E.). TATA McGraw-Hill.
Haniffa, R., & Hudaib, M. (2006). Corporate governance structure and performance of Malaysian listed companies. Journal of Business Finance & Accounting, 33(7), 1034–1062. doi:10.1111/j.1468-5957.2006.00594.x
Haniffa, R., & Hudaib, M. (2006). Corporate Governance Structure and Performance of Malaysian Listed Companies. Journal of Business Finance Accounting, 33(7-8), 1034–1062. doi:10.1111/j.1468-5957.2006.00594.x
Hsu, W.-Y., & Petchsakulwong, P. (2010). The Impact of Corporate Governance on the Efficiency Performance of the Thai Non-Life Insurance Industry. The Geneva Papers on Risk and Insurance Issues and Practice, 35(S1), S28–S49. doi:10.1057/gpp.2010.30
Hughes, J. J. (1995). The Greenbury Report on directors ’ remuneration. International Journal of Mampower, 17(1), 4–9.
Jensen, M. (1993). The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems. The Journal of American Finace Association, 48(3). doi:10.1111/j.1540- 6261.1993.tb04022.x
Jensen, M., & Meckling, W. (1976). Theory of the Firm : Managerial Behavior , Agency Costs
and Ownership Structure Structure. Journal of Financial Economics, 3(4), 305–360.
Jianakoplos, N., & Bernasek, A. (1998). Are Women More Risk Averse. Economic Inquiry, 10(4), 307–324. doi:10.1111/j.1465-7295.1998.tb01740.x
Kamardin, H., Bakar, R. A., Ishak, R., Norizah, K., Ismail, K., & Yusof, M. A. (2013). Does
Intellectual Capital Add Value to Malaysian Companies ?, 1–21.
Kang, S., & Kim, Y. (2011). Does Earnings Management Amplify The Association Between Corporate Governance And Firm Performance?: Evidence From Korea. International Business & Economics Research Journal, 10(2), 53–66.
Khanchel, I. (2008). Corporate governance: measurement and determinant analysis. Managerial Auditing Journal, 22(8), 740–760.
Lin, C. (2013). Corporate Governance and firm Performance: The Case of Chinese AD Rs. The International Journal of Finance, 25(1), 7580–7595.
Lückerath-Rovers, M. (2011). Women on boards and firm performance. Journal of Management & Governance, 17(2), 491–509. doi:10.1007/s10997-011-9186-1
Newton, H. J., Baum, C. F., Beck, N., Cameron, a C., Epstein, D., Hardin, J., … Kohler, U.
(2007). Robust standard errors for panel regressions with cross-sectional dependence. Stata Journal, 7(3), 281–312. doi:The Stata Journal
Ntim, C. (2013). The King Reports, Independent Non - executive Directors and Firm Valuation on the Johannesburg Stock Exchange. Ntim and Osei, 2011), 9(1), 1–31.
Offstein, E. H., Gnyawali, D. R., College, R. B. P., & Polytechnic, V. (1985). Effects of CEO- BOD Mentoring on Firm Competitive Behavior, 193–206.
Renders, A., & Gaeremynck, A. (2007). The Impact of Legal and Voluntary Investor Protection on the Early Adoption of International Financial Reporting Standards (IFRS). De Economist, 155(1), 49–72. doi:10.1007/s10645-006-9041-y
Rossouw, G. J. (2005). Business Ethics and Corporate Governance in Africa. Business & Society, 44(1), 94–106. doi:10.1177/0007650305274851
Setia-atmaja, L. Y. (2008). Does Board Size Really Matter? Evidence from Australia. Gadjah Mada International Journal of Business, 10(3), 331–352.
Smith, N., Smith, V., & Verner, M. (2013). why are so few female promoted into CEO and Vice president position: Danish emperical Evidence, 1997-2007. ILR Review, 66(April), 1997– 2007.
Ujunwa, A. (2012). Corporate Board Diversity and Firm Performance : Evidence from Nigeria,
13(4), 605–620.
Xiaoyan, W. (2013). Corporate Governance and Risk Management in Developing Market : A
Logic Analysis and Proposal, 7(1), 73–76. doi:10.3968/j.ibm.1923842820130701.Z002 Zaheer, N. (2013). Effects of Duality , Board Size and Board Composition on Corporate
Governance Disclosure in Pakistan. International Samanm Journal of Finance and Accounting, 1(3), 1–16.
Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance☆. Journal of Financial Economics, 94(2), 291–309. doi:10.1016/j.jfineco.2008.10.007
Adams, R. B., & Mehran, H. (2012). Bank board structure and performance: Evidence for large bank holding companies. Journal of Financial Intermediation, 21(2), 243–267. doi:10.1016/j.jfi.2011.09.002
Adewuyi, A. O., & Olowookere, A. E. (2013). New corporate code and immediate performance change of the Nigerian firms. Corporate Governance: The International Journal of
Business in Society, 13(2), 169–183. doi:10.1108/14720701311316643
Agrawal, A., & Knoeber, C. R. (1996). Firnn Performance and Mechanisms to Control Agency Problems between Managers and Shareholders, 31(3), 377–398.
Akpan, E. O., & Amran, N. A. (2014). Board characteristics and company performance :
Evidence from Nigeria, 2(3), 81–89. doi:10.11648/j.jfa.20140203.17
Al-Matar, E. M., Al-Swidi, A. K., & Bt Fadzil, F. H. (2014). The Effect of Board of Directors Characteristics, Audit Committee Characteristics and Executive Committee Characteristics on Firm Performance in Oman: An Empirical Study. Asian Social Science, 10(11), 149– 171. doi:10.5539/ass.v10n11p149
Bajtelsmit, V. (1999). Gender differences in defined contribution pension decisions. Financial Services Review, 8(1), 1–10. doi:10.1016/S1057-0810(99)00030-X
Bijalwan, J. G., & Madan, P. (2013). Corporate Governance Practices , Transparency and Performance of Indian Companies. IUP Journal of Corporate Governance, 12(3), 46–79.
Bøhren, Ø. (2007). Aligned , informed , and decisive : Characteristics of value-creating boards.
SSRN.
Boyd, C. (1996). Ethics and corporate governance: The issues raised by the Cadbury report in the United Kingdom. Journal of Business Ethics, 15(2), 167–182. doi:10.1007/BF00705585 Brickley, J. A., Coles, J. L., Jarrell, G., Chapman, D., Coles, J., Denis, D., … Zirnmer-, J. (1997).
Leadership structure : Separating the CEO and Chairman of the Board 1. Journal of Corporate Finance, 3(January 1994), 189–220.
Campbell, K., & Mínguez-Vera, A. (2007). Gender Diversity in the Boardroom and Firm Financial Performance. Journal of Business Ethics, 83(3), 435–451. doi:10.1007/s10551- 007-9630-y
Carter, D. a., Simkins, B. J., & Simpson, W. G. (2003). Corporate Governance, Board Diversity, and Firm Value. The Financial Review, 38(1), 33–53. doi:10.1111/1540-6288.00034
Christensen, J., Kent, P., & Stewart, J. (2010). Corporate Governance and Company Performance in Australia. Australian Accounting Review, 20(4), 372–386. doi:10.1111/j.1835-2561.2010.00108.x
Daily, C. M., & Dalton, D. R. (1994). Bankruptcy and Corporate Governance: the Impact of Board Composition and Structure. Academy of Management Journal, 37(6), 1603–1617. doi:10.2307/256801
Davis, G. F., & Cobb, J. A. (2009). Resource Dependence Theory : Past and Future • Resource Dependence Theory : Past and Future Abstract. Research in Socialogy of Organisation, 1– 31.
Dowen, R. J. (2001). board of Director quality and Firm Performance. International Journal of Economics of Business, 2(1), 123–131.
Edogbanya, A., & Kamardin, H. (2014). Adoption of International Financial Reporting Standards in Nigeria: Concepts and Issues. Journal of Advanced Management Science, 2(1), 72–75. doi:10.12720/joams.2.1.72-75
Edogbanya, A., & Kamardin, H. (2015). The Relationship between Audit and Risk Management Committees on Financial Performance of Non-financial Companies in Nigeria : A
Conceptual Review. Mediterranean Journal of Social Sciences, 6(3), 206–211. doi:10.5901/mjss.2015.v6n3p206
Ellstrand, a. E., Tihanyi, L., & Johnson, J. L. (2002). Board Structure and International Political Risk. Academy of Management Journal, 45(4), 769–777. doi:10.2307/3069310
Finegold, D., Benson, G. S., & Hecht, D. (2007). Corporate Boards and Company Performance: review of research in light of recent reforms. Corporate Governance: An International Review, 15(5), 865–878. doi:10.1111/j.1467-8683.2007.00602.x
García-Sánchez, I.-M. (2009). The effectiveness of corporate governance: board structure and business technical efficiency in Spain. Central European Journal of Operations Research, 18(3), 311–339. doi:10.1007/s10100-009-0112-4
Gujarati, D. N. (2004). Basic Econometrics (fouth E.). TATA McGraw-Hill.
Haniffa, R., & Hudaib, M. (2006). Corporate governance structure and performance of Malaysian listed companies. Journal of Business Finance & Accounting, 33(7), 1034–1062. doi:10.1111/j.1468-5957.2006.00594.x
Haniffa, R., & Hudaib, M. (2006). Corporate Governance Structure and Performance of Malaysian Listed Companies. Journal of Business Finance
Hsu, W.-Y., & Petchsakulwong, P. (2010). The Impact of Corporate Governance on the Efficiency Performance of the Thai Non-Life Insurance Industry. The Geneva Papers on Risk and Insurance Issues and Practice, 35(S1), S28–S49. doi:10.1057/gpp.2010.30
Hughes, J. J. (1995). The Greenbury Report on directors ’ remuneration. International Journal of Mampower, 17(1), 4–9.
Jensen, M. (1993). The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems. The Journal of American Finace Association, 48(3). doi:10.1111/j.1540- 6261.1993.tb04022.x
Jensen, M., & Meckling, W. (1976). Theory of the Firm : Managerial Behavior , Agency Costs
and Ownership Structure Structure. Journal of Financial Economics, 3(4), 305–360.
Jianakoplos, N., & Bernasek, A. (1998). Are Women More Risk Averse. Economic Inquiry, 10(4), 307–324. doi:10.1111/j.1465-7295.1998.tb01740.x
Kamardin, H., Bakar, R. A., Ishak, R., Norizah, K., Ismail, K., & Yusof, M. A. (2013). Does
Intellectual Capital Add Value to Malaysian Companies ?, 1–21.
Kang, S., & Kim, Y. (2011). Does Earnings Management Amplify The Association Between Corporate Governance And Firm Performance?: Evidence From Korea. International Business & Economics Research Journal, 10(2), 53–66.
Khanchel, I. (2008). Corporate governance: measurement and determinant analysis. Managerial Auditing Journal, 22(8), 740–760.
Lin, C. (2013). Corporate Governance and firm Performance: The Case of Chinese AD Rs. The International Journal of Finance, 25(1), 7580–7595.
Lückerath-Rovers, M. (2011). Women on boards and firm performance. Journal of Management & Governance, 17(2), 491–509. doi:10.1007/s10997-011-9186-1
Newton, H. J., Baum, C. F., Beck, N., Cameron, a C., Epstein, D., Hardin, J., … Kohler, U.
(2007). Robust standard errors for panel regressions with cross-sectional dependence. Stata Journal, 7(3), 281–312. doi:The Stata Journal
Ntim, C. (2013). The King Reports, Independent Non - executive Directors and Firm Valuation on the Johannesburg Stock Exchange. Ntim and Osei, 2011), 9(1), 1–31.
Offstein, E. H., Gnyawali, D. R., College, R. B. P., & Polytechnic, V. (1985). Effects of CEO- BOD Mentoring on Firm Competitive Behavior, 193–206.
Renders, A., & Gaeremynck, A. (2007). The Impact of Legal and Voluntary Investor Protection on the Early Adoption of International Financial Reporting Standards (IFRS). De Economist, 155(1), 49–72. doi:10.1007/s10645-006-9041-y
Rossouw, G. J. (2005). Business Ethics and Corporate Governance in Africa. Business & Society, 44(1), 94–106. doi:10.1177/0007650305274851
Setia-atmaja, L. Y. (2008). Does Board Size Really Matter? Evidence from Australia. Gadjah Mada International Journal of Business, 10(3), 331–352.
Smith, N., Smith, V., & Verner, M. (2013). why are so few female promoted into CEO and Vice president position: Danish emperical Evidence, 1997-2007. ILR Review, 66(April), 1997– 2007.
Ujunwa, A. (2012). Corporate Board Diversity and Firm Performance : Evidence from Nigeria,
13(4), 605–620.
Xiaoyan, W. (2013). Corporate Governance and Risk Management in Developing Market : A
Logic Analysis and Proposal, 7(1), 73–76. doi:10.3968/j.ibm.1923842820130701.Z002 Zaheer, N. (2013). Effects of Duality , Board Size and Board Composition on Corporate
Governance Disclosure in Pakistan. International Samanm Journal of Finance and Accounting, 1(3), 1–16.
Published
2019-07-15
Section
Articles
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