Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria
International Journal of Finance and Banking Research
Volume 5, Issue 6, December 2019, Pages: 154-165
Received: Sep. 8, 2019; Accepted: Oct. 4, 2019; Published: Nov. 7, 2019
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Authors
Yimka Samson Akanfe Alalade, Department of Banking and Finance, Babcock University, Ilishan-Remo, Nigeria
Babatunde Babasola Onadeko, First City Monument Bank, Sagamu, Nigeria
Okezie Fine-Country Okezie, Federal Inland Revenue Service, Lagos, Nigeria
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Abstract
Nigerian companies adopted the code of best practice on corporate governance in 2003, through which private and public firms are mandated to operate accordingly. Many companies have complied while some have failed to so. This study examined corporate governance practices eight years after (2010), given the instability in the political and economic environment under which they operated. The study also examined the relationship between corporate governance practices and firms’ financial performance in the selected manufacturing companies in Lagos State, Nigeria. The study employed a comparative analysis to gauge the changes to corporate governance practice between the years 2003 to 2010 by manufacturing companies. The companies were selected based on availability of data from the stock exchange in terms of activities of trading and existence of reports on corporate governance in the companies’ annual reports. The study used both descriptive statistics and econometrics method of analysis, using E-views 7 statistical software. The Panel data of the ten companies for the 8 years was used, employing ordinary least square (OLS) method of analysis. Consequently, the results of the descriptive statistics show that majority of the companies implemented the code of conduct that emphasizes appropriate composition of the board of directors and forecast of operations. Further analysis shows that there was positive relationship between the return of equity and legal compliance, though the relationship is weak given the value of R as 0.197. Also, there were weak relationships between return on equity (ROE) and board compliance as R = -0.4430 and proactive indicators R as - 0.2345. These imply that while the companies obey the regulations in term of board composition, legal compliance and production projections, which are the major concerns of this study. Meanwhile, some other variables impacted more on ROE.
Keywords
Corporate Governance, Financial Performance, Return on Equity, Manufacturing Firms, Board Composition
To cite this article
Yimka Samson Akanfe Alalade, Babatunde Babasola Onadeko, Okezie Fine-Country Okezie, Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria, International Journal of Finance and Banking Research. Vol. 5, No. 6, 2019, pp. 154-165. doi: 10.11648/j.ijfbr.20190506.14
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Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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