Board characteristics and the financial performance of Nigerian quoted firms

Augustine Ujunwa

363 citations0/0 files storedCorporate Governance

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Corporate Finance and Governance Gender Diversity and Inequality Corporate Governance and Financial Management

Abstract

Purpose The purpose of this paper is to investigate the impact of corporate board characteristics on the financial performance of Nigerian quoted firms. Board characteristics studied comprise board size, board skill, board nationality, board gender, board ethnicity and CEO duality. Design/methodology/approach The study employed the random‐effects and fixed‐effects generalised least squares (GLS) regression to test the six hypotheses formulated for the study, while controlling for firm size and firm age. Findings Using panel data from 122 quoted firms in Nigeria between 1991 and 2008, it was found that board size, CEO duality and gender diversity were negatively linked with firm performance, whereas board nationality, board ethnicity and the number of board members with a PhD qualification were found to impact positively on firm performance. The result of the robustness test using the same board characteristics for 160 small firms showed that board duality was positively linked to firm performance, while a PhD qualification was negatively linked to firm performance. Practical implications The study contributes to the understanding of the board‐performance link by examining both the traditional variables such as board size, CEO duality and other organisational attributes such as ethnic diversity, foreign nationality and competence variables represented by women and PhD holders, respectively. The results provide an insight for practitioners and policy makers on the importance of relying on institutional specifics in the prescription of corporate governance codes. Originality/value The study adds value to the global corporate governance discourse in two ways: first, the use of Nigeria, which is claimed to have one of the weakest business cultures in the world, and secondly, using a good number of proxies that are country‐specific for corporate boards.

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References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 2001Econometric Analysis of Cross Section and Panel Data 1983Separation of Ownership and Control 1989Agency Theory: An Assessment and Review 1980Agency Problems and the Theory of the Firm 2009Women in the boardroom and their impact on governance and performance☆1998The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle 2003Corporate Governance, Board Diversity, and Firm Value

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