Appraisal of Corporate Internal Governance Mechanism and Banks’ Metrics in Nigeria
2021
This research work observed the relationship between corporate internal governance mechanism
and the financial metrics of banks in Nigeria. Over the years, emphasis has been placed on the
use of eff ective governance to instill corporate discipline in maximizing stakeholders’ value.
Using the performance information of five quoted banks in the Nigerian Stock Exchange with an
aggregate of forty-five observations spanning from 2011 -2019 sample years, this study sheds
some light on the degree of linearity of corporate internal governance measures such as board
size, board composition, board independence, and bank liquidity on financial metrics of banks in
Nigeria. The method of analysis adopted is the panel regression involving fixed eff ect estimation
techniques. The correlation coefficient was used to measure the degree of association between
our governance variables and profitability indices; while a robust estimator involving panel
corrected standard error was applied. The estimated result for board size and board independence
reveals a significant lag eff ect on bank
performance. Board composition appears to have a significant inverse relationship with bank
metrics which further suggests a low acceptance and adherence to cooperate governance by
most banks with its resultant adverse eff ect on the bank metrics. Also, a statistical inverse
relationship between the board size of a bank and its metrics was observed which suggests
that increasing the size of the board of directors of a bank does not guarantee its performance.
Hence, the study recommends that there is need for the regulatory authorities to reassess the
procedures for the appointment of directors to the board in order to ensure uniform standards;
transparency, accountability and stability exist in these financial markets.
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