Corporate Governance Characteristics and Firm Value of Deposit Money Banks in Nigeria

Abstract

The degree of corporate and market procedures, lack transparency, distortions and poor corporate practices which results in corporate failures and abysmal corporate financial performance negatively influence corporate objectives. Hence, this study investigated the effects of corporate governance mechanisms on the value of deposit money banks in Nigeria from 2010 to 2020. The specific objectives include investigating the relationship between board size and Tobin q; evaluating the relationship between board independence and Tobin q; determining the relationship between board ownership and Tobin q; investigating the effect of gender diversity on Tobin q and evaluating the relationship between board meetings and Tobin q. The study population consisted of all deposit money banks and the Taro Yamene method of sample size determination was applied. The secondary data for the study was from the published financial statements of sampled banks for the period after the validity and reliability test of data. The data obtained were tested using univariate, bivariate and multivariate analysis. The results from the multiple regression results disclosed that board independence, the board size, ownership structure, gender diversity and board meetings positively and significantly influence the value of deposit money banks in Nigeria. The study concluded that corporate governance attributes positively and significantly affect the value of deposit money banks in Nigeria. The study made several recommendations amongst others that board sizes should be enhanced as this allows for the appropriate combination of directors. A large board increases the chance of directors having appropriate knowledge, skill and networks. The knowledge, skill and networks of directors may increase the financial performance of an organisation. Also, deposit money banks in Nigeria should have non-executive directors who act as professional advisers to ensure that competition among insiders encourages measures consistent with the maximisation of shareholder value. Hence, the implication of this study provides that the implementation of corporate governance characteristics enhances the value of firms in deposit money banks in Nigeria.

Examining the impact of corporate governance and corporate financial reporting on firm value: A study of selected banks in Nigeria

“…Specifically, board independence, earnings persistence, and earnings predictability were found to have a positive significant effect on market capitalization, while gender diversity also exerted positive effect but was not statistically significant. The Fstatistics showed that the combined explanatory variables of board independence, gender diversity, earnings persistence, and earnings predictability had a positive effect on market capitalization, which is consistent with the findings of the studies by Tiep Le and Nguyen (2022), Ebimobowei (2022), Marie et al (2021), Boshnak (2021), Khanifah et al (2020), Ali et al (2020), andOchego et al (2019) who reported similar positive effects of corporate governance of firm's value and performance. However, the results of this study were insistent with the report of Aguguom et al (2019), which found a positive but insignificant effect of board independence on firm value.…”

Corporate Governance Mechanisms and Financial Performance of Listed Companies in Nigeria

“…Hasibuan and Khomsiyah (2019) state that corporate governance describes the means by which all stakeholders interested in the growth of the organisation attempt to ensure that managers take actions or implement mechanisms that protect the interests of the stakeholders. Appah (2022b) notes that such measures are required by the separation of ownership from management, an increasingly important attribute of contemporary organisation. The major aim of good corporate governance is to ensure the efficient use of resources to reduce corporate fraud and mismanagement in order to maximize and align the conflicting interests of all stakeholders (Yimbila, 2017).…”