CORPORATE GOVERNANCE AND ORGANIZATIONAL EFFECTIVENESS A STUDY OF SELECTED BANK IN NIGERIA

Lokoja Journal of Management and Technology Issue: VOL6 No. 2      ISSN: 2006-3342       Publisher: LOJMAT       Published: Apr 2021

Akoh Ojonugwa       Oguche Alphonsus Alfa      



The study examined the relationship between corporate governance (board size and board composition) and organizational effectiveness of selected banks in Nigeria for the period 2006-2016. Secondary data were extracted from the annual report of 5 money deposit banks that form the sample of the study and analyzed using the panel multiple regression analysis. The result reveals that board size has negative and significant   association with organizational effectiveness. The study therefore recommended that banks should have adequate board size to the scale and complexity of the company's  operations and be composed in such a  way as to ensure diversity of experience without compromising independence, compatibility, integrity and availability of members to attend meetings.

Abstract

The study examined the relationship between corporate governance (board size and board composition) and organizational effectiveness of selected banks in Nigeria for the period 2006-2016. Secondary data were extracted from the annual report of 5 money deposit banks that form the sample of the study and analyzed using the panel multiple regression analysis. The result reveals that board size has negative and significant   association with organizational effectiveness. The study therefore recommended that banks should have adequate board size to the scale and complexity of the company's  operations and be composed in such a  way as to ensure diversity of experience without compromising independence, compatibility, integrity and availability of members to attend meetings.

Keywords: Corporate Governance, Organizational Effectiveness , Banks, Nigeria.

Introduction

Background to the Study

Interest in corporate governance has grown tremendously in the last two decades. Corporate scandals, environmental concerns, globalization and the recent global financial crisis have all played their part in rising renewed shareholder and public awareness of the governance of companies (Ranjbar, 2009).

According to Cadbury Committee (2012), corporate governance is simply the system through which the corporation can be directed and controlled in an effective way. The pursuance or corporate governance mechanism ensures the financial viability of corporate business as through it all the affairs of the firm are managed effectively and directed towards the creation of value for the shareholders. The division of powers is explained, and it provides the mechanism for the accountability of management and corporate boards. Major corporate governance codes were developed in 2002 in the US and the UK after an increase in corporate collapse such as Enron, WorldCom and Royal Bank of Scotland due to fraud in accounting practices and poor internal controls,. The principle of corporate governance enforces firms for making timely and accurate disclosure of corporate information (OECD, 2004).

Effective corporate governance practices are essential to achieving and maintaining public trust and confidence in the banking system, which are critical to proper functioning of the banking sector and the economy of a country as a whole. Poor corporate governance may contribute to bank failures, which could in turn lead to a ruin on the bank, unemployment and negative impact on the economy (Basel Committees, 1999). In addition, problems or failures of banks are likely to rapidly expand and have a disproportional adverse impact on the smooth operation of the financial system of a country (Allen & Herring, 2001).

The board of director has a significant role to play in ensuring good corporate governance in the bank and at the heart of the corporate governance debate is the view that board of directors is the guardian of shareholders' interest (Dalton et al, 1998). Boards are being criticized for failing to meet their governance responsibilities. Major institutional investors put pressures on (incompetent) directors and have long advocated changes in the board in the board structure (Monks and Minow, 2001).

Consequently, in relating corporate governance and organizational effectiveness, evidence in the literature shows that a good system of corporate governance in banks enhance the efficiency of fund allocation, promotes savings thereby reducing not only the cost of funds but also enhancing their access by the ultimate users. Gompers, Ishii and Metrick (2003) aver that good corporate governance practices increases firm value and boosts profitability.

Empirical evidence of positive correlation between corporate governance and firm performance exists in Klapper and Love (2003), documented evidence that good corporate governance practices lead to higher firm valuation. With regard to Board characteristics Simpson and Gleason (1999) find no significant correlation between  corporate  governance and bank performance Kyereboah- Coleman and Biekpe (2006) finding that listed firms  on the Nairobi Stock Exchange, those with large boards employ more of debit financing; board independence  correlates negatively with short- terms  debts; and CEO duality correlates negatively with debt financing. Adeusi, Akeke, Aribaba and Adebisi( 2013) find positive  correlation between board size and bank performance but a significant negative correlation between board composition and bank performance in Nigeria.

Inspite of conflicting evidence for corporate governance as a major driver of corporate performance, it is widely acknowledged that lack of inadequate corporate governance practice promote corporate failures. The OECD (2009), for instance, attributes the 2007 global financial crisis to failure and weaknesses of corporate governance structures. Similarly, the 2009 banking crisis that led to the 2010 banking reforms in Nigeria was attributed to weak corporate governance structures in the affected banks (Sanusl, 2009).

It is against this background that this study examines corporate governance and organizational effectiveness with a particular focus on the Nigerian Banking Industry.

Statement of the Problem

The issues of corporate governance have been a subject of major concern for researchers, scholars and for banking industry in recent years. Such concern has brought about many intense contentions on the subject, which prompted numerous studies on it in the area firms' governance structure over the years.

Previous studies on the relationship between corporate governance and organizational effectiveness in terms of profitability available in the literature are mixed and inconclusive. While some studies documented positive association, others reported a negative association between corporate governance variables and profitability. Hence, necessities the need to carry out a further study to justify their stance and to annex where necessary.

Additionally, most of these previous studies had not explicitly identified the corporate governance measure adopted in their various studies (for example, Okoye, Evbuomwan, Achugamonu and Araghan, 2016; and Ehikioya, 2009). Consequently, the lack of evidence on corporate governance criteria reduces confidence in generalizing the relationship between corporate governance variables and profitability.

Furthermore, though a few studies had examined corporate governance on organizational effectiveness in Nigeria, they had not been incisive enough in terms of time scope (covering on the average of 5 years).However, if a new study is conducted to empirically extend the scope to ten (10) years, it might produce different results. Hence, as a result of inconsistent results, lack of corporate governance variables in some studies, and the paucity of studies exploiting the relationship between corporate governance and organizational effectiveness for ten (10) years in Nigeria, this present study represents a modest effort to fill the gaps identified in the literature by empirically investigating corporate governance and organizational effectiveness in Nigeria with focus .on selected money deposit banks.

Objectives of the Study

The major objective of the study is to investigate the corporate governance and organizational effectiveness in Nigeria, with focus on selected money deposit banks. However, the specific objectives of the study are to:

i. Determine the extent to which board size affects the profitability of selected money deposit banks in Nigeria. ii. Ascertain the extent to which board composition affects profitability of selected money deposit banks in Nigeria.

Research Questions

To this end, this study will endeavour to find answers to the following questions.

  1. To what extent does board size affect the profitability of selected money deposit banks in Nigeria?

  2. To what extent does board composition affects the profitability of selected money deposit banks in Nigeria?

Scope of the Study

The research work centres on corporate governance and organizational effectiveness of selected in banks. This study is porpositively limited to five (5) money deposit banks namely: First Bank, GTB, Access Bank Zenith Bank and UBA. This study covers a period of ten (10) years, spanning from 2006-2016. However, the study uses two distinct concepts viz a viz: corporate governance and organizational effectiveness. However, the study will utilize two (2) corporate governance variable (i.e. board size and board composition) for analysis despite the availability of an array of them, only one (1) organizational effectiveness variable was used in this study (i.e. profitability). Review of Related Literature

Concept Review

Concept of Corporate Governance

 The tasks of defining the concept of corporate governance are enormous, yet a clear definition of the concept is very essential in order to create the needed awareness and to achieve good practice in Nigeria and beyond. Basel Committee on Banking Supervision  (2006) describes the concept  from a banking industry perspective that corporate  governance involves the manner in which the business and affairs of banks are governed  by the Board of Directors and senior management which, inter alia, affects how they (1) set corporate objectives  (2) operate the bank's business on a day –to-day basis  (3) meet the obligation of accountability to their shareholders and take into account the interest of other recognized stakeholders (including, inter  alia, supervisors, government and depositors (4) align corporate  activities and behaviour with the expectation that banks will operate in a safe  and second manner and in compliance with applicable laws and regulations, and  sound manner and in compliance with applicable laws and regulations, and (5) protect the interest of depositors.

In his own view Jayashree (2006) defines corporate governance when used in the context of business organization is a system of making directors accountable to shareholders for effective management of the companies in the best interest of the company and the shareholders along with concern of ethics and values. It is a management of companies through the Board of Directors that thing on complete transparency, integrity and accountability of management.

Corporate governance is concerned with the establishing of a system whereby the Directors are entrusted with responsibilities and duties in relation to the direction of corporation affairs. It is concerned with accountability of persons who are managing it towards shareholders. It is concerned with the monitoring based on ethics, values, parameters of conduct and behaviour of the company and its management.

Concept of Organizational Effectiveness

Organizational effectiveness is the concept of how effective an organization is in achieving the outcomes the organization intends to produce. Organizational effectiveness groups in organizations directly concern themselves with several key areas. They are talent management, leadership development, organizational design and structure, design of measurements and scorecards, implementation of change and transformation, deploying smart processes and smart technology to manage the firms' human capital and the formulation of the broader Human Resources Agenda.

Also organizational effectiveness is a broad concept and is difficult to measure in organizations (Draft, 2003). It takes into consideration a range of variables at both the organizational department levels.  It evaluated the extent to which the multiple goals that are not precise or measureable. However, performance measurement that is tied to strategy execution can help organizations reach their goals. Draft ( 2003) has identified two major approaches  to measurement  of organizational  approaches include the goal approach, the system resources approach and the internal process approach. The goal approach to organizational effectiveness which this study considers is concerned with the outputs, whether the organization achieves its goals in terms of the desired level   of outputs. This means that this approach identifies the organization's output goals and assesses how well they have been attained. It is based on the fact that organizations have goals they are expected to achieve. Hall and Clark, (1998) argue that the important goals to consider are the operative goals and not the official goals. The official goals tend to be abstract and difficult to measure while the operative goals reflect the activities the organization is actually performing.

Theoretical Framework

Agency Theory

Agency theory focuses on the contract or governing relationship between the principal and the agent. It centre on addressing the resolving (1) the conflicting interests of the principal and the agent (2) information asymmetry, and (3) risk propensity concern (Jensenn & Meckling, 1976). Agency theory, as applied to corporate governing, implies that “ the major role of the board is to reduce the potential  governance, implies that “the major role of the board is to reduce the potential divergence of interest between  shareholders, and management, minimizing agency cot, and protecting shareholders' investments” (Hendry & Kiel, 2004-503). Agency theory provides insight into how boards monitor the behaviour of managers. However, it does not take into account how the external institutional of managers. However, it does not take into account how the external institutional environment can modify the board's ability to direct and control the firm.

Considering the characteristics of developed and developing markets, it can be said that agency theory is more applicable and relevant to the developing market due to existence of weak regulatory authorities, low level of economic development and low institutional and organizational infrastructure in these market which can be likened in some way to the situation in Nigeria.

Empirical Studies on Corporate Governance and organizational effectiveness

The debate on the relationship between corporate governance and organizational effectiveness has not attracted great attention from management researchers. This is evident in the number of empirical studies conducted from both developed and developing economics over the years. Some of these empirical studies are presented below:

Osik and Riza (2016) investigated the impact of board size and board composition on board composition on performance for a sample of 30 commercial banks from 2008 to 2012 in Turkey. Using the panel data regression analysis, the result of panel fixed effects regression suggests that board size has a significantly positive effect on bank's financial performance. This means that Turkish commercial banks may improve their financial performance by increasing their board size. Also, the findings revealed that there is no significant relationship between board composition (ratio of outside directors on the board) and bank's financial performance.

Examined the effect of corporate governance on the profitability of banking sector in Nigeria. Return on equity (ROE) and return on asset (ROA) were adopted as proxies for banking sector profitability while capital adequacy ratio (CAR), liquidity ratio (LQR) and ratio of non –performance loans to total loans (NPL) were adopted as proxies for corporate governance. Inflation rate was implemented as a control variable. Empirical evidence from the study shows significant impact of corporate governance on the profit performance of the Nigerian banking sector.

Aminu, Aisha and Muhammad (2015) investigated the effects of board size and board composition on the performance of Nigerian banks. Using the multiple regression analysis, the result revealed that board size has significant negative impact on the performance of banks in Nigeria. This signifies that an increase in board composition would lead to a decrease in ROE and ROA. On the other hand, board composition has a significant positive effect on the performance of banks in Nigeria. This signifies that an increase in board composition would lead to a decrease in ROE and ROA. In another study, examined corporate governance and organizational performance in the Nigerian Banking Industry. The survey research design method was employed. The research instrument was a validated structured questionnaire. The major analysis tools comprised the correlation and multiple regression analysis. It was revealed that unethical behaviour by employees seems to affect individuals, work teams and even the organization. The study concludes that corporate governance through ethical behavior has positive effect employee's productivity. Corporate governance is about ensuring transparency, building credibility and ensuring accountability as well as maintaining an effective channel of information disclosure that would enhance good corporate performance.

Gap in Literature

From a survey of the empirical studies above, the relationship between corporate governance and organizational effectiveness have attracted great attention from management researchers. The relationship between corporate governance and organizational effectiveness in terms of profitability available in the literature are mixed and inconclusive. While some studies documented positive association, others reported a negative association between corporate governance variable and profitability.

Additionally, most of these previous studies had not explicitly indentified the corporate governance measures adopted in their various studies (for example, Okoye, Evbuomwan, Achugamonuand Aragha, 2016; and Ehikioya, 2009). Consequently, the lack of evidence on corporate governance criteria reduces confidence in generalizing the relationship between corporate governance variables and profitability.

Furthermore, though a few studies examined corporate governance on organizational effectiveness in Nigeria had not been in-depth in terms of time scope (covering on the average of 5 years). However, it a new study is conducted to empirically extend the scope to ten (10) years, might produce different results. Hence, as a result of inconsistent result, lack of corporate governance variables in some governance and organizational effectiveness for ten (10) years in Nigeria, this present study represents a modest effort to fill the gaps identified in the literature by empirically investigation corporate governance and organizational effectiveness in Nigeria, with focus on selected money deposit banks.

Methodology

The correlational research design was adopted for this study. A correlation research design is used to describe the statistical relationship between two or more variables. It is most appropriate for this study because it allows for testing of expected relationship between and among variables and the making of predictions regarding such relationships.

The population of the research comprises twenty-two (22) money deposit banks listed in the Nigerian Stock Exchange (NSE) as at 31st December, 2016. In determining the sample size, the judgmental sampling technique filter was applied thus i. Banks with missing value for the variables used were excluded. ii. The bank was not involved in any merger during the study period.

iii. For the empirical part of this study, the data is limited to bank that is in existence throughout the period of the study.

Purposively, five (5), money deposits banks were selected namely: First Bank, GTB, Access Bank, Zenith Bank and UBA.

The study used secondary data extracted from published annual reports and accounts of the sampled firms and the Nigerian Stock Exchange (NSE) fact book for the relevant years. This study covers the period of 2006-2016. The period is considered relevant for a study of corporate governance because of the global economic meltdown that rocks the world (Nigeria inclusive).

Presentation and Analysis of Data

This section presents results and discusses major findings of the study. Descriptive statistics is discussed first, followed by correlation matrix, multicollinearity test and finally the regression result,

Table 1: Descriptive Statistics 

 

ROA

BOD SIZE 

BOD COM

Mean 

39.60709

11

0.546364

Median 

43.75000

12

0.500000

Maximum 

57.00000

15

0.900000

Minimum 

6.000000

7

0.270000

Std. Dev.

14.03752

2.315796

0.170689

Skewness 

-0.725196

-0.589358

0.597313

Kurtosis

2.368353

2.109761

2.461495

Jarque-Bera

5.213778

5.000183

3.935064

Probability 

0.073764

0.082077

0.139801

Sum 

1980.354

624.1000

30.05000

Sum Sq.Dev.

9655.552

289.5971

1.573273

Observations 

50

50

50

Source: E-views 9 Output 2016

Table 1 present the descriptive statistics of two (2) measures of corporate governance variable (BODSIZE and BODCOM) and organizational effectiveness measures (ROA) containing mean, media, standard deviation, minimum and maximum, skewness, kurtosis and Jarque-Bera statistics. The following are important descriptive statistics to highlight;

The ROA was observed to have a mean of 39.61% and a standard deviation of 14.03, that on the average, for every N1 invested in assets, the selected banks for the period of ten (10) years would earn N39.61.

The BODSIZE was observed to have a mean of 11 and a standard deviation of 2.3. The maximum and minimum values were 15 and 7 respectively. This result indicates that, on the average, the selected banks have 11 directors on their board.

The BODCOM was observed to have a mean of 0.55 and a standard deviation of 0.17, the maximum and minimum values was 0.50 and o.27 respectively. The result indicates that, on the average, the selected banks have 55% outside directors sitting on the board.

In order to test the normality of the variables, the Jacque –bera statistics was conducted. An evaluation of the Jacque-bera statistics for the variables indicates that ROA, BODSIZE and BODCOM satisfy the normality condition with a p-value of the Jacque-bera statistics greater than 5% (0.07, 0.08 and 0.13).

Also confirming the normality of the data set, both skewness and kurtosis value are within the tolerable range of +1 to -1, establishing the fact that the data are normal distributed in each construct. Given our result therefore the skewness for all the variables: ROA, BODSIZE and BODCOM were all above 1 with values of -073, -059 and 0.60 respectively. Similarly, the Kurtosis values were not too high with value of 2.37, 2.11 and 2.46 for ROA, BODSIZE and BODCOM respectively. The values of the skewness and kurtosis for all the variable signify the absence of outliers in the data set.

Table 2: Correlation Matrix

Correlation 

ROA 

BODSIZE

BODCOM

ROA 

1.000000

 

 

BSIZE

-0.152856

1.000000

 

BODCOM

0.516384

0.280271

1.000000

Source: E-views 9 output 2016

From table 2 above, the ROA is observed to correlate negatively with BODSIZE (r=0.15) and positively with BODCOM (r=0.51). In addition, table 4.2 further shows the relationship between the repressors in the study model. The result shows that none of the correlation coefficient in the table above is greater than 0.8 (rule of the thumb). Suggesting that there is no problem of multicollinearity in the explanatory variable.

Table 3: Multicollinearity Test

Variable      

Coefficient  Variance 

Centred VIF 

C

3.667801

NA

BSIZE

0.513023

1.085248

BODCOM 

8.203671

1.085248

Source: E-views 8 output 2016

In examining the multicollinearity among the study variable, Variance Inflation Factors (VIF) test was conducted and presented in table 3, according to Hair (2006), the common cut-off threshold is a tolerance value of 0.10, which corresponds to a VIF less than 10. The result obtained indicates that multicolinearity does not exist among all independent variables because the VIF values for all the independent variables were less than 10. Therefore, the result suggests that the current study does not have any problem with multicollinearity. This is in line with the correlation matrix that reveals absence of multicollinearity among the repressors.

Table 4: Regression Result 

Variable 

Coefficient 

Std Error                       T- Statistics

Pr0b.

C

2.211102

0.982995                      2.249352

0.0002

BODSIZE

-0.806948

0.3166256                               -

2.551565

0.0106

BODCOM

0.580610

0.209777                      

2.767748

0.0000

R-squared

0.662758

Mean dependent  var

39.60709

Adjusted R -

Squared 

0.635641

S.D Dependent var

14.03752

S.E of Regression

11.44174

Akaike infor criterion 

7.770537

Sum Squared resid 

6152.925

Schwarz criterion 

7.885258

Log likelihood 

-191.2634

Hanna-Quinn Criter

7.814224

F-Statistics 

13.37766

Durban –Wastson Stat

1.866933

Prob. (F-Statistics)

0.000025

 

 

Source: E-view 9 output 2016

Table 4 above present the summary of regression result of the dependent variable (ROA) and the independent variable, corporate governance (represented by board size and board composition). The result shows that the model is fit for estimation and explanatory variables are properly selected, combined, and used. This can be confirmed by the value of  F- Statistic of 13.38 (p=0.00) significant at 1% level of significance. This implies that the explanatory variable includes in the model of the study are sufficient to explain the relationship between corporate governance and organizational effectiveness (proxy by ROA) of selected banks in Nigeria. The coefficient of determination R is 66.3. This shows that 66.3% of variation in the dependent variable is jointly explained by the explanatory variable specified in the study model. The Durbin- Watson statistics of 1.86 (appropriately 2) implies absence of auto- correlation problem within the study period.

The result of regression analysis shows that board size (BODSIZE) has a negative (0.81) and significant (p-value= 0.01) relationship with organizational effectiveness (proxy buy ROA) of the sampled banks during the study period. The possible reasons for the negative relationship are because board size significantly engenders bank effectiveness in Nigeria. This finding suggest that a similar board size  can enhance banks' effectiveness as the smaller size can take quick  and adequate decision for the performance of the banks as large boardrooms tends to be slow in making decisions, and hence can be an obstacle to change.

The findings is consistent with the documentation of Aminu, Aisha and Muhammed (2015) and Ehikioya (2009) that board sizes have a negative and significant effect on organizational effectiveness.

Table 4.4 above also reveals a positive (0.58) and significant (p-value = 0.00) relationship between board composition (BODCOM) and bank effectiveness (ROA) of  selected listed bank on the NSE. This finding suggests that banks with higher presence of non- executives or independence members in their boards performs better than the others. This is correct because outside directors have the incentives to act as monitors of management because they want to protect their reputations as effective, independent decision makers. This present finding collaborates prior findings by Aminu, Aisha and Muhammed (2015), Kajola (2008) and Romuald and Tham (2012) who documented a positive and significant association between BODCOM and organizational effectiveness  (proxy by ROA).

Conclusion and Recommendations

This study examines the relationship between corporate governance (board size and board composition) and organizational effectiveness of selected money deposit bank in Nigeria for the period of 2006-2016. The study concludes that board size has a negative and significant association with banks effectiveness within the study period.  The study also concludes that board composition had a significant and positive association with banks' effectiveness. The study therefore, recommends that bank should have adequate board size to the scale and complexity of the company's operations and be composed in such a way as to ensure diversity of experience without compromising independence, compatibility, integrity and availability of members to attend meetings. The board size should not be too large and must be made up of qualified professional who are conversant with oversight functions. Also, the board should comprises a mix of executive and non-executive directors, headed by  a Chairman. The majority of Board members should be non –executive directors whom should be independent directors.

References

Adebayo, M., Ibrahim, A.O., Yusuf, B.O, Omah, I. & Department (2014). Good Corporate Governance and Organizational Performance: An Empirical Analysis. International Journal of Humanities' and Social Science, 4(7) , 170-178.

Adegbite, E. (2012) Corporate Governance regulation in Nigeria, Corporate Governance. The International Journal of Business in Society, 12 (2) 257-276.

Adeusi, S.O, Akeke, N.L; Aribaba, F.O & Adebisi, O.S (2013). Corporate Governance and Firm Financial Performance. Do Ownership and Board Size Matter? Academic Journal of Interdisciplinary Studies, 2 (3): 231-258.

Afolabi, A. & Dare, A.M. (2015). Corporate Governance in the Nigerian Banking Sector: Issues and Challenges. European Journal of Accounting Auditing and Finance Research, 3 (5), 64-89.

Allen, F.  and Herring, R. (2001). Banking Regulations Versus Securities market Regulations, Wharton Financial Institutions Centre, 29.

Amah, E. (2012). Corporate Culture and Organizational Effectiveness: A Study of the Nigerian Banking Industry. European Journal of Business and Management, 4 (8), 212-229.

Aminu, B., Aisha, M., & Muhammad, T. (2015). The Effect of Board Size and Composition on the Financial Performance of Banks in Nigeria. African Journal of Business Management, 9 (16) 590-598.

Basel Committee on Banking Supervision (1999). Principles for the Management of Credit Risk.BIS working paper, 1999 (September).

Cadbury Committee  (2012). Financial Reporting Council on UK Corporate  Governance Code.http://www/slxc.co.uk/media/78872/uk-corporate-governacecode-september-2012.pdf(accessed on17/03/18).

Christensen, J. Kent, P. & Stewart, J. (2010). Corporate Governance and Company Performance in Australia, Australian Accounting Review, 20 (4), 374-386.

Dalton, D.R, Daily, A.E., Elistrand & Johnson, J.L (1998). Meta-analytic Review of Boaed of Composition, Leadership Structure and Financial Performance. Strategic Management Journal 19,269-290.

Ehikioya, B.I (2009). Corporate Governance Structure and Firm Performance in Developing Economic Evidence from Nigeria. Corporate Governance: The International Journal of Business in Society, 9 (3), 231-243.

Ejuvbekpokpo, S.A, & Esuike, B.U (2013). Corporate Governance Issues and its implementation:  the Nigerian Experience. Journal of Research In International Business Management  ISSN: 2251-0028, 3 (2) 53-57.

Gompers, P., Patelli, L., Victoravich, L.M. & Xu, P.T (2011). Corporate Governance  and Performance in the Wake of the Financial Crisis: Evidence from US Commercial Banks. Corporate Governance: An International Review; 19 (50), 418-436.

Isik, O., & Riza Ince, A. (2016). Board Size, Board  Composition and Performance: An Investigation of Turkish Banks. International Business Research 9 (2), 74.

Kajola, S.O (2008). Corporate Governance and Firm Performance, Paper Presented at the Faculty Seminar of Facility of Management Science, Olabisi Onabanjo University, Ago – Iwoye.

Klapper, L.F. & Love, I. (2004). Corporate Governance, Investor Protection, and Performance in Emerging Markets. Journal of Corporate Finance, 10, 703-728.

Kyereboath- coleman, A & Biekpe, N. (2006). Corporate Governance and Financing  Choices of firms: a Panel  Data Analysis. South African Journal of Economics, 74,670-681.

Mamatzakis, E. & Bermpei, T. (2015). The effect of Corporate Governance on the Performance of US Investment Banks. Financial Markets, Institutions and Instruments, 24 (2-3), 191-239.

Monks, R. & Minow, N. (2003). Corporate Governance. London: Wiley & Sons, Inc.

Odita, A.O & Egbule, S. (2015). Workforce Diversity and Transitional Effectiveness in Nigeria Brewery Industry. Developing Country Studies, 5 (8), 74-86.

OECD (2004). OECD Principles of Corporate Governance. Paris: OECD,

https://www.oecd.org/corporate/ca/corporatgovernanceprinciples/31557724pdf/ (accessed:17/03/18.

Okoye, L.U, Evbuomwan, G., Achugamonu, U. & Araghan, I. (2016). Impact of Corporate Governance on the Profitability of the Nigerian Banking Sector, Enugu State University of Science and Technology (ESUT) Journal of Accountancy: 7 (1) 281-292.

Olanye, A,P, & David, A, (2010). Corporate Governance and Merger activity in the Nigerian banking industry. J. Economics, 1 (2) 91-97.

Olusola, O. & Olowolaju, L. (2013). Incessant Financial Scandals in the Corporate Transition in Nigeria: Auditor's culpability. Research Journal of Finance and Accounting, 4 (9), 104-110.

Otman, K.A (2014). Corporate Governance and Firm Performance in Listed Companies in the United Arab Emirates. Indian Journal of Science and Technology, 1 (2), 1379.

Pillai, R., Al-Malkawi, H., & Nizar, A. (2017). On the Relationship Between Corporate Governance and Firm Performance: Evidence from GCC countries. Research in International  Business and Finance,  1 (3) 231-239.

Ranjbar, A. (2009). Corporate Governance and Financial Performance ( a Study of Malaysia Listed Companies) School of Business  Faculty of Business and Accountancy, University of Malaya, (March).

Richard, P.J., Devinney, T.M.m Yip, G.S. & Johnson, G. (2009). Measuring  Transitional Performance; Towards Methodological Best Practice. Journal of Management, 35 (3), 718-804.

Romuald, J. & Tham, A. (2012). The Impact of Board  size on Firm Performance:

Evidence from the UK. The European Journal of Finance, 15 (4) 385-404.

Sanusi, L.S (2009). Development in the Banking System. Address by the Governor of the Central Bank of Nigeria Mallam Sanusi Lamido Sanusi, August, 14, 2009.

Simpson, W.F & Gleason, A.E. (1999). Board Structure, Ownership and Financial Distress in Banking Firms. International Review of Economic and Finance, 8, 281-292.

Appendix I: Corporate Governance Mechanism and Bank Profitability 

Bank 

Year 

BODSIZE 

BODCOM

ROA

FIRST  BANK

2006

13.0

0.4

15.9

FIRST  BANK

2007

11.0

0.6

23.8

FIRST  BANK

2008

15.0

0.3

27.4

FIRST  BANK

2009

13.0

0.5

26.4

FIRST  BANK

2010

12.0

0.5

26.4

FIRST  BANK

2011

12.8

0.5

35.7

FIRST  BANK

2012

12.8

0.6

39.2

FIRST  BANK

2013

12.8

0.6

42.7

FIRST  BANK

2014

12.8

0.6

46.2

FIRST  BANK

2015

12.8

0.6

49.7

FIRST  BANK

2016

12.8

0.7

53.2

GTB 

2006

11.0

0.3

6.0

GTB

2007

11.0

0.3

12.0

GTB

2008

11.0

0.3

13.0

GTB

2009

12.0

0.3

13.0

GTB

2010

12.0

0.3

12

GTB 

2011

12.3

0.4

18.7

GTB

2012

12.6

0.4

20.9

GTB

2013

12.9

0.4

23.1

GTB

2014

13.2

0.4

25.3

GTB

2015

13.5

0.5

27.5

GTB

2016

14.8

0.5

29.7

ACCESS 

2006

8.0

0.5

56.0

ACCESS

2007

8.0

0.5

57.0

ACCESS 

2008

8.0

0.5

50.0

ACCESS

2009

8.0

0.5

50.0

ACCESS 

2010

8.0

0.5

39

ACCESS

2011

8.0

0.5

44.5

ACCESS 

2012

8.0

0.5

42.0

ACCESS

2013

8.0

0.5

39.5

ACCESS

2014

8.0

0.5

37.0

ACCESS 

2015

8.0

0.5

34.5

ACCESS

2016

8.0

0.5

32.0

ZENITH 

2006

7.0

0.4

56.0

ZENITH

2007

7.0

0.4

57.0

ZENITH

2008

7.0

0.4

50.0

ZENITH 

2009

12.0

0.6

50.0

ZENITH

2010

12.0

0.6

39

ZENITH

2011

12.0

0.6

50.0

Appendix II: Descriptive Statistics 

 

ROA

BOD SIZE 

BOD COM

Mean 

39.60709

11

0.546364

Median 

43.75000

12

0.500000

Maximum 

57.00000

15

0.900000

Minimum 

6.000000

7

0.270000

Std. Dev.

14.03752

2.315796

0.170689

Skewness 

-0.725196

-0.589358

0.597313

Kurtosis

2.368353

2.109761

2.461495

Jarque-Bera

5.213778

5.000183

3.935064

Probability 

0.073764

0.082077

0.139801

Sum 

1980.354

624.1000

30.05000

Sum Sq.Dev.

9655.552

289.5971

1.573273

O bservations 

50

50

50

Correlation Matrix

Correlation 

ROA 

BODSIZE

BODCOM

ROA 

1.000000

 

 

BSIZE

-0.152856

1.000000

 

BODCOM

0.516384

0.280271

1.000000

 

 

Multicollinearity Test 

Variable       

Coefficient  Variance 

Centred VIF 

C

3.667801

NA

BSIZE

0.513023

1.085248

BODCOM 

8.203671

1.085248

 

Regression Result 

Variable 

Coefficient 

Std Error                     T          -

Statistics

Pr0b.

C

2.211102

0.982995                      2.249352

0.0002

BODSIZE

-0.806948

0.3166256                     -

2.551565

0.0106

BODCOM

0.580610

0.209777                      

2.767748

0.0000

R-squared

0.662758

Mean dependent  var

39.60709

Adjusted R -

Squared 

0.635641

S.D Dependent var

14.03752

S.E of Regression

11.44174

Akaike infor criterion 

7.770537

Sum Squared resid 

6152.925

Schwarz criterion 

7.885258

Log likelihood 

-191.2634

Hanna-Quinn Criter

7.814224

F-Statistics 

13.37766

Durban –Wastson Stat

1.866933

Prob. (F-Statistics)

0.000025

 

 

 

Adebayo, M., Ibrahim, A.O., Yusuf, B.O, Omah, I. & Department (2014). Good Corporate Governance and Organizational Performance: An Empirical Analysis. International Journal of Humanities' and Social Science, 4(7) , 170-178.

Adegbite, E. (2012) Corporate Governance regulation in Nigeria, Corporate Governance. The International Journal of Business in Society, 12 (2) 257-276.

Adeusi, S.O, Akeke, N.L; Aribaba, F.O & Adebisi, O.S (2013). Corporate Governance and Firm Financial Performance. Do Ownership and Board Size Matter? Academic Journal of Interdisciplinary Studies, 2 (3): 231-258.

Afolabi, A. & Dare, A.M. (2015). Corporate Governance in the Nigerian Banking Sector: Issues and Challenges. European Journal of Accounting Auditing and Finance Research, 3 (5), 64-89.

Allen, F.  and Herring, R. (2001). Banking Regulations Versus Securities market Regulations, Wharton Financial Institutions Centre, 29.

Amah, E. (2012). Corporate Culture and Organizational Effectiveness: A Study of the Nigerian Banking Industry. European Journal of Business and Management, 4 (8), 212-229.

Aminu, B., Aisha, M., & Muhammad, T. (2015). The Effect of Board Size and Composition on the Financial Performance of Banks in Nigeria. African Journal of Business Management, 9 (16) 590-598.

Basel Committee on Banking Supervision (1999). Principles for the Management of Credit Risk.BIS working paper, 1999 (September).

Cadbury Committee  (2012). Financial Reporting Council on UK Corporate  Governance Code.http://www/slxc.co.uk/media/78872/uk-corporate-governacecode-september-2012.pdf(accessed on17/03/18).

Christensen, J. Kent, P. & Stewart, J. (2010). Corporate Governance and Company Performance in Australia, Australian Accounting Review, 20 (4), 374-386.

Dalton, D.R, Daily, A.E., Elistrand & Johnson, J.L (1998). Meta-analytic Review of Boaed of Composition, Leadership Structure and Financial Performance. Strategic Management Journal 19,269-290.

Ehikioya, B.I (2009). Corporate Governance Structure and Firm Performance in Developing Economic Evidence from Nigeria. Corporate Governance: The International Journal of Business in Society, 9 (3), 231-243.

Ejuvbekpokpo, S.A, & Esuike, B.U (2013). Corporate Governance Issues and its implementation:  the Nigerian Experience. Journal of Research In International Business Management  ISSN: 2251-0028, 3 (2) 53-57.

Gompers, P., Patelli, L., Victoravich, L.M. & Xu, P.T (2011). Corporate Governance  and Performance in the Wake of the Financial Crisis: Evidence from US Commercial Banks. Corporate Governance: An International Review; 19 (50), 418-436.

Isik, O., & Riza Ince, A. (2016). Board Size, Board  Composition and Performance: An Investigation of Turkish Banks. International Business Research 9 (2), 74.

Kajola, S.O (2008). Corporate Governance and Firm Performance, Paper Presented at the Faculty Seminar of Facility of Management Science, Olabisi Onabanjo University, Ago – Iwoye.

Klapper, L.F. & Love, I. (2004). Corporate Governance, Investor Protection, and Performance in Emerging Markets. Journal of Corporate Finance, 10, 703-728.

Kyereboath- coleman, A & Biekpe, N. (2006). Corporate Governance and Financing  Choices of firms: a Panel  Data Analysis. South African Journal of Economics, 74,670-681.

Mamatzakis, E. & Bermpei, T. (2015). The effect of Corporate Governance on the Performance of US Investment Banks. Financial Markets, Institutions and Instruments, 24 (2-3), 191-239.

Monks, R. & Minow, N. (2003). Corporate Governance. London: Wiley & Sons, Inc.

Odita, A.O & Egbule, S. (2015). Workforce Diversity and Transitional Effectiveness in Nigeria Brewery Industry. Developing Country Studies, 5 (8), 74-86.

OECD (2004). OECD Principles of Corporate Governance. Paris: OECD, https://www.oecd.org/corporate/ca/corporatgovernanceprinciples/31557724pdf/ (accessed:17/03/18.

Okoye, L.U, Evbuomwan, G., Achugamonu, U. & Araghan, I. (2016). Impact of Corporate Governance on the Profitability of the Nigerian Banking Sector, Enugu State University of Science and Technology (ESUT) Journal of Accountancy: 7 (1) 281-292.

Olanye, A,P, & David, A, (2010). Corporate Governance and Merger activity in the Nigerian banking industry. J. Economics, 1 (2) 91-97.

Olusola, O. & Olowolaju, L. (2013). Incessant Financial Scandals in the Corporate Transition in Nigeria: Auditor's culpability. Research Journal of Finance and Accounting, 4 (9), 104-110.

Otman, K.A (2014). Corporate Governance and Firm Performance in Listed Companies in the United Arab Emirates. Indian Journal of Science and Technology, 1 (2), 1379.

Pillai, R., Al-Malkawi, H., & Nizar, A. (2017). On the Relationship Between Corporate Governance and Firm Performance: Evidence from GCC countries. Research in International  Business and Finance,  1 (3) 231-239.

Ranjbar, A. (2009). Corporate Governance and Financial Performance ( a Study of Malaysia Listed Companies) School of Business  Faculty of Business and Accountancy, University of Malaya, (March).

Richard, P.J., Devinney, T.M.m Yip, G.S. & Johnson, G. (2009). Measuring  Transitional Performance; Towards Methodological Best Practice. Journal of Management, 35 (3), 718-804.

Romuald, J. & Tham, A. (2012). The Impact of Board  size on Firm Performance: Evidence from the UK. The European Journal of Finance, 15 (4) 385-404.

Sanusi, L.S (2009). Development in the Banking System. Address by the Governor of the Central Bank of Nigeria Mallam Sanusi Lamido Sanusi, August, 14, 2009.

Simpson, W.F & Gleason, A.E. (1999). Board Structure, Ownership and Financial Distress in Banking Firms. International Review of Economic and Finance, 8, 281-292.

Lokoja Journal of Management and Technology © Copyrights 2022 Designed by RGS.