International Journal of Finance and Banking Research

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Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria

Received: Sep. 08, 2019    Accepted: Oct. 04, 2019    Published: Nov. 07, 2019
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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.

DOI 10.11648/j.ijfbr.20190506.14
Published in International Journal of Finance and Banking Research ( Volume 5, Issue 6, December 2019 )
Page(s) 154-165
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Corporate Governance, Financial Performance, Return on Equity, Manufacturing Firms, Board Composition

References
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  • APA Style

    Yimka Samson Akanfe Alalade, Babatunde Babasola Onadeko, Okezie Fine-Country Okezie. (2019). Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria. International Journal of Finance and Banking Research, 5(6), 154-165. https://doi.org/10.11648/j.ijfbr.20190506.14

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    ACS Style

    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. Int. J. Finance Bank. Res. 2019, 5(6), 154-165. doi: 10.11648/j.ijfbr.20190506.14

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    AMA Style

    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. Int J Finance Bank Res. 2019;5(6):154-165. doi: 10.11648/j.ijfbr.20190506.14

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  • @article{10.11648/j.ijfbr.20190506.14,
      author = {Yimka Samson Akanfe Alalade and Babatunde Babasola Onadeko and Okezie Fine-Country Okezie},
      title = {Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria},
      journal = {International Journal of Finance and Banking Research},
      volume = {5},
      number = {6},
      pages = {154-165},
      doi = {10.11648/j.ijfbr.20190506.14},
      url = {https://doi.org/10.11648/j.ijfbr.20190506.14},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijfbr.20190506.14},
      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.},
     year = {2019}
    }
    

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  • TY  - JOUR
    T1  - Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria
    AU  - Yimka Samson Akanfe Alalade
    AU  - Babatunde Babasola Onadeko
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    PB  - Science Publishing Group
    SN  - 2472-2278
    UR  - https://doi.org/10.11648/j.ijfbr.20190506.14
    AB  - 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.
    VL  - 5
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    ER  - 

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Author Information
  • Department of Banking and Finance, Babcock University, Ilishan-Remo, Nigeria

  • First City Monument Bank, Sagamu, Nigeria

  • Federal Inland Revenue Service, Lagos, Nigeria

  • Section