The impact of board oversight functions on the performance of listed companies in Nigeria

Abstract

Abstract:We ascertain the impact of board oversight functions on the financial performance of listed companies. The study covers the entire 186 companies listed on the Nigeria stock exchange for a period of five years between 2010 and 2014. Three aspect of board oversight function which includes the audit committee function, risk management committee function and remuneration/human capital committee function were considered in this study in line with the provision of (SEC) code of corporate governance and (OECD) code of corporate governance. Return on capital employed and earnings per share were used as the measures of firm financial performance. We conducted both descriptive and inferential statistics on a set of data extracted from the audited financial statement of the listed companies. The descriptive statistics include the mean, standard deviation, minimum and maximum value for each variable while the inferential statistics includes the univariate t-test and multivariate regression analysis. The findings of this study revealed that board oversight function have significant impact on the financial performance of listed companies in Nigeria. The significant relationship between the board oversight functions and financial performance reported in this study have been asserted in previous literature in Africa (Beltratti & Stulz, 2009) and Asia (Fahlenbrach & Stulz, 2009; Fernandes & Fich, 2009) which implies that this might be the global trend on the topic. Thus, the general hypothesis which predicts a significant 1 Corresponding author: Department of Accounting, Bowen University, Iwo, Osun State, Nigeria; tel. +2348066308115; email: oyeezekiel2903@yahoo.comThe impact of board oversight functions on the performance of listed companies in Nigeria relationship between board oversight function and firm financial performance cannot be rejected. Therefore, the recommendations emanating from this study is that concerted efforts should be put in place by the security and exchange commission to ensure strict compliance with regulations regarding the formation of audit committee and other oversight committees by the Nigerian listed companies.

Forensic auditing mechanism and fraud detection: the case of Nigerian public sector

“…For example, Hassink et al (2010) conducted a survey of a group of legal practitioner and forensic accountants and discovered that approximately 69% of the respondents testified to several cases of fraud being detected. Their strong agreement is also consistent with the findings of Ijeweremo (2015) and Oyerogba et al (2017) that reported a significant increase in the degree of effectiveness of forensic auditors in unveiling fraudulent practices in different sectors of the economy surveyed.…”

Board Characteristics and Profitability of Manufacturing and Allied Firms Listed at the Nairobi Securities Exchange, Kenya

“…As exposed by the outcome, it was observed that board size had a negative (-0.5222163) and p-value of insignificant (0.148) effect on the listed firms' profitability in Kenya. The outcome is consistent with Eyenubo (2013), however, the outcome is at variance with Tanna, Pasiouras, & Nnadi (2013); Oyerogba, Memba, and Riro (2016) and Tulung et al (2018).…”

“…The outcome is at variance with Tanna, Pasiouras, & Nnadi (2013) who concluded that the size of the governing body has a large influence on how profitable as well as effective an enterprise is. Oyerogba, Memba, and Riro (2016) demonstrated that the profitability of the traded firms is substantially influenced by the size of the board. Tulung et al (2018) showed that the size of the board as well as independence have a beneficial impact on the performance of a banking institution.…”

Exploring the governance committee: the trinity’s great forgotten

“…The specific duties and responsibilities of the governance committee have been described to some extent in Hall et al (2005) and Leblanc et al (2012). Oyerogba et al (2017) developed a board oversight function index including 14 items related to the remuneration/governance committee function. Further business ethics descriptive studies depict the governance committee as a channel for receiving employee complaints (Lipman, 2007), a reporting authority referenced in the code of ethics of listed companies (Bodolica and Spraggon, 2015) and a board subcommittee that can help the audit committee strengthen business ethics (Marx and Els, 2009).…”

“…The impact of governance committees seems non-significant on earnings management (Talbi et al , 2015), earnings per share and return on capital (Oyerogba et al , 2017) and corporate social responsibility reporting (Barakat et al , 2015; Dilling, 2009). However, the presence of a governance committee reduces aggressive financial reporting (Huang et al , 2009) and is associated with a higher level of voluntary disclosure (Ntim et al , 2017).…”