Board characteristics and involvement in strategic decision making

Abstract

Purpose This paper aims to review how corporate governance is institutionalised in Nigeria and examine the relationship between board size, CEOs’ duality, board composition and the board's involvement in strategy. Design/methodology/approach A structured questionnaire was sent by post to the chairmen of 138 publicly quoted companies in Nigeria in November 2004. Findings Using primary and secondary data, our results suggest that the Nigerian public companies have embraced some principles of the Code of Best Practices for Public Companies. There is a high level of board involvement in strategy decision‐making process, but no correlation was found between board involvement and a number of governance variables (board size, board independence and CEO duality). Research limitations/implications The sample of 39 responding companies is small although it represents a 28 per cent of response rate and is representative of the Nigerian stock market. However, we are unable to look at other factors such as industry sectors and we cannot generalise our findings regarding corporate governance practices in Nigeria. Practical implications The investment climate in Nigeria can become more reassuring than in the past although there is room for further improvements as the effectiveness of the corporate government practices is still in doubt. Originality/value This paper adds to the scanty literature available on corporate governance practices in developing, countries. Findings extend our understanding about the strategic functions of the board in Nigeria, which is Africa's most populous nation, and the world's sixth larger producer of oil.

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