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INFLUENCE OF CORPORATE GOVERNANCE MECHANISMS ON FINANCIAL PERFORMANCE OF QUOTED BANKS IN NIGERIA

YAKUBU Aminu Bello, Dr. MURTADHO, Alao, ADENIYI, Sarafadeen Diran (Ph.D), ADEDEJI Adeshina Akeem (Ph.D)

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Abstract

A lack of good corporate governance was a significant factor that fueled the Global Financial Crisis. Corporate governance failures are not only associated with developed economies; emerging economies like Nigeria have also experienced corporate governance failures, especially in the last two decades. This study investigates the influence of corporate governance mechanisms on the financial performance of quoted banks in Nigeria from 2011 – 2022. The study employs stakeholder theory, panel-ARDL, and other appropriate methods as the primary analysis tools. The study showed that audit committee independence (ACI) revealed a moderate negative association with financial performance variables in the long run. In the short run, changes in audit committee independence showed a positive statistically significant effect on ROA. Institutional investors and board independence were influential in the long run but negatively related to financial performance variables. However, board gender diversity was not significant in both the long-run and short-run in relation to return on assets. Notably, the ECT positively influences the financial performance of quoted banks in Nigeria. The study contributes to the literature on the relationship between corporate governance and financial performance, especially from the stakeholder theory dynamics. Corporate governance mechanisms are complex and dynamic. Therefore, optimal governance arrangements may be bank-specific in terms of governance attributes. This complexity necessitates policies recognizing the context-dependent nature of governance dynamics, fostering an environment where banks can adapt and innovate within regulatory frameworks.

Keywords: Banks, Financial Performance, Corporate Governance, Influence