Corporate Governance on Stakeholders’ Obligations of Non-financial Firms Quoted in Nigeria: Moderating Effect of Firm Size and Liquidity

Abstract

Entities exist to create value for, not only their shareholders but all groups of stakeholders that affect and are affected by the entities' activities. Studies have however revealed that companies do fall short of meeting stakeholders' obligations for reasons not unconnected with ineffective corporate governance mechanisms. This study examined the effect of corporate governance on stakeholders' obligations of non-financial quoted companies in Nigeria and the extent to which firm size and liquidity moderate this effect. The study adopted ex-post facto research design and the population comprised 73 companies from the non-financial sectors that have faced financial distress in the period of consideration and shall be classified as failed or financially distressed firms. Using the purposive sampling technique, a sample of 52 delisted or suspended firms were selected for the study using stratified and purposive sampling techniques. The study used data extracted from the annual reports of the sampled companies covering 2008 to 2019. The finding revealed that corporate governance had a significant effect on stakeholder's obligations (Adj R 2 = 0.117, Wald-Test = 32.57, p = 0.000). The study further shows that firm size and liquidity significantly moderated the effect of corporate governance on the stakeholders' obligation of non-financial firms quoted in Nigeria. On the basis of these empirical findings, the study recommended that the management of non-financial quoted firms in Nigeria should properly consider their size and liquidity positions in their corporate governance policy.