Corporate Governance and Profitability of Listed Food and Beverages Firms in Nigeria

Abstract

At its core, the goal of a firm is to create sustainable profitability. And corporate governance should work to ensure this steady increase in corporate performance. Understanding the impact of corporate governance on firm profitability has warranted a special attention over time by different fields of scientific knowledge. This study was aimed to explore the relationship between corporate governance and profitability of firms, employing eight food and beverages firms listed in the Nigerian Stock Exchange from 2004 to 2014. The data were analysed using basic descriptive and inferential statistics with Ordinary Least Square multiple regression in a panel data setting. The results revealed that at 5 per cent level of significance, board size has positive relationship with return on equity and net assets per share. However, board composition has negative relationship with return on equity but with positive association with net assets per share. Board skills and competence has negative relationship with return on equity and net assets per share, while board gender diversity results indicated positive relationship with return on equity and net assets per share. Despite the mixed results, it can be argued that the empirical results support the contention that corporate governance has a positive relationship with profitability of firms. The study recommends among other things, that Nigerian food and beverages firms should adopt effective corporate governance practice as a panacea to firm growth and survival. Further research using corporate governance processes and profitability will not only add value in explaining performance of firms, but also add value to the academic literature.

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“…In this study a negative and significant relationship is found between debt and profitability. This is in line with a number of prior empirical study of Bevan & Danbolt, (2004).it however, departed and not in congruence with a number of prior empirical studies including Kalu, (2016) It is very obvious from the result obtained there is significant relationship between firm's debt financing and the corporate governance variables of board size, CEO duality and outside directors.…”

“…only paid attention to financial performance of companies in Nigeria (Kalu 2016;Araoye 2020). However, since little has been done to specifically look at quoted manufacturing firms in Nigeria, this study will address the gap by venturing into examining the effect corporate governance on the capital structure of listed manufacturing firms in Nigeria.…”

Do board characteristics and risk management disclosure have any effect on firm performance? Empirical evidence from Deposit Money Banks (DMBs) in Nigeria

“…In contrary report to the positive findings, Nwonyuku (2016) who used OLS regression model, examined the relationship between CG and profitability of 8 sampled firms in the Nigerian food and beverages industry for the period of 2004 to 2014, finds that there is a significant negative relation between board skill and competence, and financial performance represented by ROE and net asset per share (NA/S). in addition, Hauser (2013) reports that multiple directorships (board expertise) have a negative effect on the performance of S&P 1500 companies (thereby having a sample of 22, 465 firm-years from 1996 to 2011) in the U.S.…”

U‐shaped relationship between environmental performance and financial performance of non‐financial companies: An empirical assessment

“…Board size (BS) has been calculated by considering total number of executives on board (Lipton & Lorch, 1992; Pearce & Zahra, 1992; Tibiletti et al, 2021). “The firms with high executives on the board are found to take benefit of their number in ensuring governance process and this upsurges in production and thus improves the profitability of the firm,” (Nwonyuku, 2016). The company's age (AGE) is computed as number of periods elapsed since the company was initially incorporated (Coad et al, 2013; Loderer & Waelchli, 2010).…”