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Corporate Governance Practices and Financial Performance of Listed Manufacturing Companies in Nigeria

Professor Olumide AKINRINOLA PhD, Folasade Ayomikun ODUSOLA

Abstract

This study investigates the effect of corporate governance practices on the financial performance of manufacturing companies in Nigeria, with particular focus on board size, board composition, and board member competence. The study adopted an ex-post facto research design, which is appropriate for analyzing events that have already occurred and cannot be manipulated. A purposive sampling technique was employed to select ten (10) manufacturing firms from a population of fifty-seven (57) listed on the Nigerian Exchange Group. The selected companies were chosen based on data availability and their relative stability over the 15-year period between 2009 and 2023. Secondary data were obtained from the companies' annual reports, accessed through their official websites. Using return on assets (ROA) as a measure of financial performance, the findings reveal that all three corporate governance variables have a statistically significant and positive impact on firm performance. Specifically, larger board sizes enhance performance through broader oversight; balanced board composition improves transparency and strategic direction; and board member competence has the strongest effect, highlighting the value of knowledge and expertise. Based on these results, the study recommends that firms adopt well- structured boards with diverse and competent members to strengthen governance, improve decision-making, and drive sustainable financial performance in the Nigerian manufacturing sector.

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References

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