Effect of Board Size, Board Composition and Board Meetings on Financial Performance of Listed Consumer Goods in Nigeria

Abstract

The central thrust of this study is to examine the effect of board size, board composition and board Meetings on the financial performance of listed consumer goods in Nigeria over the period of ten years from 2006 to 2015. The study uses expo factor research design and purposive sampling technique (filter) as research design and sampling technique. The population of the study is twenty (20) listed consumer goods companies in Nigeria and a sample size of ten (10) companies were studied. The data was analysed by means of descriptive statistics, Correlation and Regression analysis using STATA (version 11). The descriptive result reveals that return on assets has minimum and maximum values of -0.0400 and 0.4700 respectively and the mean and standard deviation of 0.1199 and 0.1038 respectively. The study made use of secondary data generated from annual report and account of the sampled companies through Nigeria Stock Exchange fact book. The findings include the following: Board size is negatively significant at 1% with T. Value of _2.70, Board composition is positively significant at 1% with T- Value of 2.15 and finally, Board meeting is negatively insignificant with T- Value of _1.45. This study concluded that smaller board size are more effective than larger board size, good proportion of board composition is a good factor to enhance ROA of listed consumer goods companies in Nigeria and frequent board meeting will have negative effect on the ROA of listed consumer goods companies in Nigeria because it will limits the chances for external directors to conduct a meaningful oversight over management. Hence the study recommends among others; That smaller board size should be used in listed consumer goods companies in Nigeria to enhance their ROA, the listed consumer goods companies should continue to maintain good proportion of independence directors. The listed consumer goods companies in Nigeria should discourage unnecessary board meetings to allow board of directors perform other oversight function on the management so as to enhance the ROA of listed consumer goods companies in Nigeria.

The financial impacts of board mechanisms on performance: The case of listed Moroccan banks

“…Besides, four of the six studied banks have a classic governance structure, which leads in many situations to the appearance of manipulations that weaken bank executives' supervision by the board, despite a high proportion of institutional administrators (representatives of financial institutions and pension funds). Our results are identical to those of (Gambo et al, 2018;Johl et al, 2015). Also, they are contradictory with (Akbar et al, 2019;Alhassan et al, 2015;Tayseer Alshaboul & Ahmad Abu Zraiq, 2020;Vishwakarma, 2015).…”

Effect of Board Characteristics on Financial Performance of Listed Healthcare Firms in Nigeria

“…The study recommended that a strong and mandatory corporate governance mechanism should be put in place to ensure that the board of directors consists mostly of members that are independent of the firm, both directly and indirectly. Gambo, Bello, and Rimamshung (2018), in their study on the effect of board size, board composition, and board meetings on the financial performance of listed consumer goods in Nigeria examined the effect of board meetings, the board size, and board composition on the financial performance of publicly traded consumer goods in Nigeria, throughout the ten-year period from 2006 to 2015. The study's research design and sampling method are the expo factor research design and the purposive sampling methodology (filter).…”

Effect of board quality on the financial performance of conventional and Islamic banks: international comparative study after the Subprime crisis

“…The effectiveness of the banks' internal governance as a whole depends on the detailed efficiency of its elements (Al-Manaseer et al, 2012). Thus, the BQ is evaluated notably by the board size, the board structure and independence, the internal directors' ownership, and the number of meetings held (Hermalin and Weisbach, 2003;Nam and Lum, 2004;EL-Maude et al, 2018). With more ideal board members' choice criteria, Chapra (2007) identified three important points to respect when appointing IBs' board members: choosing the qualified directors with high moral integrity and professional competence, the members should be well trained in the Shariah rules, and they must ensure sufficient transparency in the IBs' information disclosure (Muhamad et al, 2019).…”

“…He found that board activity is limited by a small number of annual meetings. However, if outside directors do not take advantage of the time, they spend together to exchange meaningful ideas with or among directors, the frequency of meetings becomes unnecessary (Lin et al, 2014;EL-Maude et al, Board quality's effects on banks' performance 2018). Besides, stakeholders cannot wait for the board members' meetings to address emergency issues, prepare strategic programs, monitor stakeholder interests or make effective decisions since they do not have sufficient time at meetings to discuss all the alternatives (Huse, 2009).…”

“…Furthermore, among several impacts of the number of meetings on the FP that the study wanted to explain, such as the parameters of bank capital, profitability, asset quality and asset size, Choi and Lai (2014) indicated that there is a negative and statistically significant relationship between assets quality and board meetings. From their side, using Financial Ratio Analysis Method to explain the FP, Johl et al (2015) provided that board meetings have a negative impact on Malaysian firms' FP (EL-Maude et al, 2018). Also, Hanh et al (2018) concluded that in Vietnamese firms high board meeting frequency equates to low returns on assets, equity and sales.…”