Corporate Governance and Financial Performance: Evidence from Quoted Consumer Goods Firms in Nigeria.

Abstract

This study examined the effect of corporate governance on the financial performance of quoted consumer goods firms in Nigeria. The specific objectives of this study are to analyse the effect of board meetings on profits after tax for quoted consumer goods firms in Nigeria, examine the effect of board size on profits after tax for quoted consumer goods firms in Nigeria, and examine the effect of audit committee independence on profit after tax for quoted consumer goods firms in Nigeria. These objectives were hypothesized in null form. Twenty-one (21) quoted consumer goods companies listed on the Nigerian Exchange Group (NGX) make up the study's total population. Ten (10) quoted consumer products companies were selected as the study's sample using the purposive sampling technique. The study's data were sourced from the annual audited financial reports and accounts of the chosen companies for ten consumer goods companies listed on the Nigerian Exchange Group for a period of five years spanning from 2019-2023. The Hausman test was conducted to choose the best panel estimation techniques. Result based on the most consistent random effect, then revealed that board meeting (BM) had no significant relationship with profit after tax (PAT) of quoted consumer goods firms in Nigeria with a p-value of 0.9728, which is higher than the 5% (P>0.05) level of significance and a negative coefficient (-0.0202). The result also shows that board size (BS) had no significant effect on the profit after tax (PAT) with an estimated p-value of 0.4833, which is higher than the 5% level of significance and a negative coefficient (-0.1571). The result also shows the audit committee independence (AC) had no significant effect on the profit after tax (PAT) with an estimated p-value of 0.1011, which is higher than the 5% criterion of significance and a negative coefficient (-1.1069). The study therefore concludes that there is no significant relationship between the financial performance of quoted manufacturing firms in Nigeria and board meeting (BM), board size (BS), or audit committee independence (AC). The study thereby recommends, among others, that before the composition of the board size, factors including the company's size, operational complexity, strategic needs, and specialized knowledge should always be taken into account. This will enable the manufacturing firms to have strong financial performance.