ABSTRACT
This study examines the relationship between corporate governance and financial performance of randomly selected listed banks in
Nigeria. It investigates corporate governance variables and analyses whether they impact on firm performance as measured by return on asset (ROA) and profit margin (PM). Based on the review of existing literature, four corporate governance variables were selected namely: composition of board member, board size, CEO status and ownership concentration which served as the independent variables. This research examined the relationships that exist between governance mechanisms and financial performance in the Nigerian consolidated banks.And also to find out if there is any significant relationship between the level of corporate governance disclosure index among Nigerian banks and their performance. The Pearson Correlation and the regression analysis were used to find out whether there is a relationship between the corporate governance variables and firm‟s performance. In examining the level of corporate governance disclosures of the sampled banks, a disclosure index was developed guided by the CBN code of governance and also on the basis of the papers prepared by the UN secretariat for the nineteenth session of ISAR (International Standards of Accounting and Reporting). The study therefore observed that a negative but significant relationship exists between board size, board composition and the financial performance of these banks, while a
positive and significant relationship was also noticed between directors‟ equity interest, level of governance disclosure and performance. Furthermore, the t- test result indicated that while a significant difference was observed in the profitability of the healthy banks and the rescued banks, no difference was seen in the profitability of banks with foreign directors and that of banks without foreign directors. The study therefore concludes that there is no uniformity in the disclosure of corporate governance practices by the banks. Likewise, the banks do not disclose in general how their debts are performing, by providing a statement that expresses outstanding debts in terms of their ages and due dates. The study suggests that efforts to improve corporate governance should focus on the value of the stock ownership of board members. Also, steps should be taken for mandatory compliance with the code of corporate governance while an effective legal framework should be developed that specifies the rights and obligations of a bank, its directors, shareholders, specific disclosure requirements and provide for effective enforcement of the law.
TABLE OF CONTENT
Title Page……………………….. i
Declaration…………ii
Certification…………………iii
Dedication…………………iv
Acknowledgements……………v
Table of Content………………………… vi
List of Tables……………………………………. vii
List of Figures………………………………… viii
Appendices…………………………………ix
Acronyms and Definitions………………. x
Abstract…………………………………xi
CHAPTER ONE:
Introduction
Background to the Study………………..................... 1
Statement of Research Problem…………………….. 6
Objectives of Study…………………………. 10
1.3 Research Questions................................................... 11
1.4 Research Hypotheses........................................................... 12
Significance of the Study…………………………………………………………… 13
Justification of Study……………………………………………………………….. 14
Scope and limitation of Study………………………………………………………. 16
Summary of Research Methodology……………………………………………….. 17
Sources of Data ……………………………………………………………………. 18
CHAPTER TWO
Literature Review and Theoretical Framework
Introduction ………………………………………………………………….…… 25
What is Corporate Governance?..........................................................26
Historical Overview of Corporate Governance …………………………..…………28
Corporate Governance and Banks…………………………………………………... 30
Elements of Corporate Governance in Banks ……………………………...………. 34
Regulation and Supervision as Elements of Corporate
Governance in banks……………………………………………….. 36
Corporate Governance Mechanisms………………………………..………………. 41
Shareholders……………...…………………………………….42
Debt Holders………………………………………………………….43
Linkage between Corporate Governance and Firm Performance Practices………..46
The Role of Internal Corporate Governance Mechanisms in Organisational Performance………………………………………………………………. 59
Role of Auditor……………………………………………………… 72
Role of the Board of Directors…………………………………….... 87
Role of Chief Executive Officer…………………………………….. 120
CHAPTER THREE:
Research Methods
Introduction……………………………………….…………………………………
137
Research
Design…………………………………………………..………………… 137
Study
Population………………………………………………………………..….. 139
Sample
and Sampling Method………………………………………….………….. 139
Data
Gathering Method……………………………………………………..……… 140
Research
Instruments……………………………….…………….....
Method
of Data Presentation………..………………………………. 141
Model
Specification…………………………………………………………………. 141
Data
Analysis Method……………………………………………………………….
Content
Analysis……………………………………………………. 147
CHAPTER FOUR:
Data Analysis and Result Presentation
4.0
Introduction………………………………………………….…………………….. 151
4.1 Data Presentation and Analysis.................................................................................... 152
4.2
Data
Analysis (Preliminary)……………………………………………………...... 164
4.3: Data Analysis- Advance (Inferential
Analyses)........................................................... 166
4.3.1 Pearson‟s Correlation Coefficient Analysis............................................................... 166
4.3.2
Regression
Analysis ……………………………………………… 170
4.4
Hypotheses
Testing……………………………………………..………………….. 173
CHAPTER FIVE:
Summary of Findings, Conclusion and Recommendations
5.0 Introduction.................................................................................................................186
5.1
Summary
of Work Done………………………..…………………………………. 186
5.2
Summary
of Findings………………………………………………………………. 188
5.2.1
Theoretical
Findings……………………………………………….. 188
5.2.2 Empirical Findings............................................................................ 191
5.3 Conclusion................................................................................................................ 196
5.4
Recommendations…………………………………………………………………..
197
5.5
Contribution
to Knowledge………………………………………………….…….. 199
Suggestions
for Further Studies............................................................................................ 199
