Corporate governance and financial performance of oil and gas firms: The Nigerian experience

Abstract

As a result of corporate scandals, governments and corporations around the world enacted a slew of laws and recommendations known as best practices codes. As a result, this study examines the effect of corporate governance on the financial performance of listed Nigerian oil and gas firms from 2012 to 2022. The sample size for the study was set at nine firms. Corporate governance was measured by board size, composition, independence, and audit committee size, while financial performance was measured by Return on Asset (ROA) and Return on Equity (ROE). The hypotheses were tested using fixed effect panel regression, which was informed by the Hausman test. Findings revealed that board size has a significant positive effect on ROA while board size have an insignificant effect on ROE. In addition, board composition has an insignificant effect on both the ROA and ROE. Furthermore, board independence has a significant negative effect on the ROA and ROE. Similarly, the size of the audit committee has a significant negative effect on ROA, while the effect on ROE was negative but insignificant. The study concludes that corporate governance significantly affect financial performance of listed oil and gas firms in Nigeria. The Security and Exchange Commission should ensure that listed oil and gas firms adhere strictly to the required board size since a larger board does not influence financial performance.