Corporate governance mechanisms and firm financial performance in Nigeria
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Date
2005-03-04
Authors
Sanda, Ahmadu
Mikailu, Aminu S.
Garba, Tukur
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
Recent global events concerning high-profile corporate failures have put back on the
policy agenda and intensified debate on the efficacy of corporate governance mechanisms
as a means of increasing firm financial performance. This study attempts to address this
question using pooled ordinary least squares regression analysis for a sample of 93 firms
quoted on the Nigerian Stock Exchange for the period 1996–1999. While making a case
for a board size of ten and for concentrated as opposed to diffused equity ownership, the
results argue for the separation of the posts of Chief Executive Officer (CEO) and Chair.
Moreover, although the results find no evidence to support the idea that boards with a
higher proportion of outside directors perform better than other firms, there is evidence
that firms run by expatriate CEOs tend to achieve higher levels of performance than
those run by indigenous CEOs. In the main, the results are consistent with existing
literature, but there is need to err on the side of caution in any attempt to generalize the
findings as the sample selection was determined by the availability of data rather than by
any probability criterion.