Impact of Corporate Governance on the Financial Performance of Listed Manufacturing Firms in Nigeria

Abstract

The main objective of this study is to determine the impact of corporate governance on the financial performance of listed manufacturing firms in Nigeria over a period of five (5) years (2015 – 2019) for the ten (10) selected companies. This work employed three (3) corporate governance mechanism ratios for the independent variables such as: Board Size (BS), Board Independence (BI) and Board Diversity(BD) in determining their impact on performance of the firms proxied by Return on Asset (ROA) as dependent variable. The ex-post facto research design was used for this study. The secondary data were obtained from the financial statements (Comprehensive income statement and Statement of financial position) of the selected consumers goods firms quoted on the Nigerian Stock Exchange (NSE). Descriptive statistics, Pearson correlation and regressions were employed and used for this study. The results of the analysis showed that Board size has no significant impact on the financial performance of listed consumer’s goods firms in Nigeria, Board independence has negative significant effect on the financial performance of listed consumer’s goods firms in Nigeria and Board diversity (women directors) has positive significant effect on the financial performance of listed consumer’s goods firms in Nigeria. Based on the above findings, the researchers recommended In order to have a significant increase in the financial performance of the consumer’s goods firms in Nigeria, the size of the board should be increased. This will give room for more skills, expertise and experience necessary to improve firm performance, consumers goods firms should increase the number of independence director in their various organization because of their significant role in improving the performance of the organization and the firms need to set up a team which will facilitate research to keep firms up to date on role of gender diversity characteristics. This will improve the impact experienced from the estimated findings.