EFFECT OF CORPORATE GOVERNANCE ON INDUSTRIAL GOODS SECTOR’S PERFORMANCE IN NIGERIA

Abstract

This study probed the effect of corporate governance on the Industrial goods sector performance in Nigeria over a period of six (6) years spanning 2014 – 2019 using the panel regression approach for the explanatory variables. The relationship of corporate governance index [Board Composition (BCP), Audit Independence (AID), Board Independence (BID), and Audit Committee Composition (ACC)] and industrial goods firms’ performance as measured by ROA differs.The method through which data were gathered and sampled to facilitate this research was the secondary method of data collection in which information were sourced from the Annual reports of the companies studied. In analyzing the data, the researcher made use of correlation and regression to establish the relationship between corporate governance and firm’s financial performance.Test of hypotheses showed significant relationship (p= 0.045) between board composition and firm performance. Further test of hypotheses showed non-significant relationship between AID and BID, and financial performance of the industrial goods firms. The study concludes that the different indices of corporate governance has variant effect on performance. This means that, the study found mixed relationship between the variables. The study therefore recommends that shareholders should create a balance between the structures of ownership, institutional shareholders, controlling power with controlling shareholders. Also that, more studies be carried out in the specific area of internal audit composition and independence and organization performance. As it seems there is a hidden treasure, yet untapped in this area.