Corporate Governance Mechanism and Financial Performance of Quoted Non-Financial Companies in Nigeria

Abstract

The study investigates effect of corporate governance mechanisms on financial performance of quoted non-financial companies on the Nigerian Stock Exchange. The specific objectives of the study were to determine whether corporate governance proxied by board size has any effect on firm financial performance using Return on Equity (ROE) and Net Profit Margin (NPM) as a measure of firm financial performance. Ex-post facto research design was used and a sample of 75 quoted non-financial companies with complete and comprehensive published annual reports for the period under review (2010-2019) was used for the study. The Generalised Least Square (GLS) regression was employed to investigate the relationship existing between the variables. The result reveals that Board size has a positive and significant effect on Return on equity and Net profit Margin. The study concluded that corporate governance has greater effect on financial performance of sampled companies. In the light of the above findings, the study recommends that companies should improve the quality of their corporate governances’ practices as this can also improve investor confidence, reduce agency costs and signal positive firm performance.