Corporate Governance and Financial Performance of the Nigerian Banks
CHAPTER ONE
OBJECTIVE OF THE STUDY
The broad objective of the study is to examine the impact of corporate governance on financial performance in Nigeria Banks using a study of 5 Nigeria Deposit banks.
The specific objectives are;
- To examine the impact of board size on financial performance of Nigeria deposit banks.
- To examine the impact of board composition on financial performance of Nigeria deposit banks.
- To examine the impact of board committee on financial performance of Nigeria deposit banks.
- To examine the impact of number of shareholders on financial performance of Nigeria deposit banks.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
The imperative for sound corporate governance was, at early stages, underscored by the need to safeguard shareholders’ interest, but over time, the scope was extended to include protection of other important interests in business organizations (Jizi, Salama, Dixon, & Startling, 2014). The shift to stakeholder emphasis derives from the argument that these other interests are equally threatened when business organizations are poorly managed. The significance of sound governance practices to business performance is well established in the literature. For instance, Kolk and Pinske (2010) posit that strong corporate governance structures boost stakeholder confidence, strongly indicating management commitment to the efficient and responsible management of business organizations. Good corporate governance also minimizes exposure to risk for investors and promotes firm performance (Spanos, 2005). Studies by Bae and Goyal (2010), Monda and Georgino (2013), P. Dua and S. Dua (2015), I. Yang, Yan, Li, and H. Yang (2012), and Botosan (2006) show that enhanced stock performance correlates strongly with improvements in corporate governance practices. Ojeka, Iyoha, Ikpefan, and Osakwe (2017) estimated the relationship between governance and stock market behavior in Nigeria and discover the robust positive effect of independent audit committee, financial expertise of audit committee, and board independence on stock price, volume traded, earnings per share, and market capitalization. The work of Uwuigbe (2011) presents a negative correlation between bank profitability and board size, while directors’ interest and degree of corporate disclosure correlate positively with financial performance. It further shows a marked difference between healthy banks’ performance and rescued banks but did not substantiate that the performance of banks whose boards are com posed of a mix of foreign and indigenous directors differs significantly from those that do not have foreign directors. However, research by Bae and Goyal (2010) shows that foreign-owned firms record enhanced performance.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought corporate governance and financial performance of the Nigeria banks.
Sources of data collection
Data were collected from two main sources namely:
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
DATA ANALYSIS
The data collected from the respondents were analyzed in tabular form with simple percentage for easy understanding.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain corporate governance and financial performance of the Nigerian Banks.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of corporate governance and financial performance of the Nigerian Banks
Summary
This study was on corporate governance and financial performance of the Nigerian Banks. Five objectives were raised which included: To examine the impact of board size on financial performance of Nigeria deposit banks, to examine the impact of board composition on financial performance of Nigeria deposit banks, to examine the impact of board committee on financial performance of Nigeria deposit banks and to examine the impact of number of shareholders on financial performance of Nigeria deposit banks. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected banks in Uyo. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up HR, accountants, customer care officers and marketers was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
The existence of board audit committee enhances banks’ financial performance. This means that better corporate governance is achieved with the existence of audit committee in the board of directors of banks. Board composition has adverse effect on the profitability of banks. Thus, having non-executive directors in a large number, result in poor performance of banks. The directors’ equity interest has a positive effect on the financial performance of banks. Therefore, having a stake in the bank motivates the directors to do their best in ensuring a higher performance of their banks
Recommendation
The following recommendations were given:
- Banks should have audit committee in their board to enhance a higher financial performance. The members of the audit committee should be given the opportunity to discharge their duties effectively without undue influence.
- Regulatory authorities should not compel banks to increase the number of nonexecutive directors in their board as this negatively affects the profitability of banks.
- Directors should be mandated to own a reasonable amount of equity in the banks they oversee as this is one of the keysto enhance the performance of these banks.
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