Corporate Governance Disclosure, Executive Compensation and the Financial Performance of Listed Manufacturing Companies in Nigeria

Oyedeji Adejoke Ruth; Adedipe Oluwaseyi Ayodele Ph.D

doi:10.56201/ijefm.v11.no7.2026.pg326.337

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Corporate Governance Disclosure, Executive Compensation and the Financial Performance of Listed Manufacturing Companies in Nigeria

Oyedeji Adejoke Ruth, Adedipe Oluwaseyi Ayodele Ph.D

Abstract

This study examined the effect of corporate governance disclosure and executive compensation on the financial performance of listed manufacturing companies in Nigeria operating in Oyo State. The specific objectives were to: (i) examine the effect of board size on ROA; (ii) assess the effect of audit committee independence on ROA; evaluate the effect of CEO cash compensation on ROA; (iv) determine the effect of CEO equity ownership on ROA; and (v) investigate the joint effect of all four predictors on ROA. The study was underpinned by agency theory as the primary theoretical lens. An ex post facto panel research design was employed. The population comprised all manufacturing companies listed on the Nigerian Exchange Group with operational headquarters or principal manufacturing facilities in Oyo State, Nigeria. A census sampling strategy yielded five companies (Nestle Nigeria Plc, Lafarge Africa Plc, Unilever Nigeria Plc, Fidson Healthcare Plc, and Morison Industries Plc) observed over ten years (2016-2025), producing 50 firm- year observations. Secondary data were extracted from audited annual reports. The fixed effects regression model was jointly significant (F(6,43) = 204.833, p < 0.001) with excellent explanatory power (R2 = 0.9662, Adj. R2 = 0.9615). Board size (β = -0.3997, t = -0.868, p = 0.390) and audit committee independence (β = 6.4745, t = 0.901, p = 0.373) did not individually achieve statistical significance, though both coefficients carried theoretically expected positive signs. CEO cash compensation demonstrated a positive and statistically significant effect on ROA (β = 0.0255, t = 2.843, p = 0.007). CEO equity ownership exhibited a negative but statistically non-significant coefficient (β = -2.8376, t = -0.302, p = 0.764). The joint effect of all four governance and compensation variables was statistically significant (F(4,45) = 204.833, p < 0.001). The study concluded that corporate governance disclosure and executive compensation mechanisms collectively and significantly explain variations in financial performance among listed manufacturing companies in Nigeria. Thus, it was recommended that boards of directors should maintain board sizes within the seven-to- twelve range and prioritize genuine audit committee independence exceeding FRCN's two- thirds minimum; remuneration committees should design balanced CEO compensation packages with performance-vested cash bonuses and equity concentration limits not exceeding 15% of outstanding shares; and the Financial Reporting Council of Nigeria.

Keywords

Corporate GovernanceDisclosureExecutive CompensationFinancial PerformanceManufacturing Companies.

References

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Corporate Governance Disclosure, Executive Compensation and the Financial Performance of Listed Manufacturing Companies in Nigeria

Abstract

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