Impact of Corporate Governance on the Financial Performance of Selected Commercial Banks in Nigeria

Abstract

Global concerns about non-compliance and lack of full compliance with corporate governance have resulted in global corporate scandals and failures, resulting in poor financial performance of businesses as there have been high-profile corporate disappointments. These require absolute attention, which is why this study examines the impact of corporate governance on the financial performance of selected banks in Nigeria between 2012 and 2022. The ex-post facto design was used, and data on board gender diversity, board composition, and board size were used as proxies of corporate governance while the Return of Assets was used to measure the financial performance of the selected deposit money bank from 2012 to 2022. The collected data were analyzed using the panel regression data analysis to test for the extent of a causal relationship between specific corporate governance variables and financial performance measured by ROA. Findings revealed board gender diversity (β=0.187, p<0.05) positively and statistically impacts financial performance, as measured by ROA. Also, Board Composition (β=0.139, p˃0.05) is positive, with marginal impact on financial performance measured by ROA. In contrast, the Board Size (β=0.010, p<0.05) had a negative and statistically significant impact on impacts financial performance, as measured by ROA. The study concludes that corporate governance impacted the financial performance of Nigerian deposit money banks. The study recommends that organizations consider policies and initiatives promoting gender diversity on corporate boards. Management should consider evaluating and reducing board sizes to streamline decision-making and enhance governance effectiveness.