THE IMPACT OF CORPORATE GOVERNANCE ON FIRMS’ PERFORMANCE: A PANEL ANALYSIS OF THE NIGERIAN BANKING SECTOR
This study presents empirical evidence regarding the relationship between corporate governance and performance of a panel of twenty banks over the period of 2006-2009. The sample of the study was drawn from the annual reports of banks listed on the Nigeria Stock Exchange over the period under review. Panel data regression models was developed and various balance-and-check tests such as Jarque-Bera, Hausman specification test, white heteroscedasticity test, and correlation analysis were undertaken in order to provide best estimate for the model. In addition, descriptive statistics such as mean, standard deviation, minimum, median, maximum, skewness and kurtosis were obtained in order to describe the characteristics of the variables. The findings from the study shows that contrary to expectations, proportion of non executive directors on the board was negatively significant in explaining corporate performance of banks, while ownership concentration and directors ownership were statistically insignificant in explaining performance. These results can perhaps be attributed to regulatory lapses on the part of the regulatory agencies, particularly the CBN given the fact that the CBN code of corporate governance came into force to enhance sound corporate governance practices in the banking sector after many years of corporate governance abuses. There is therefore the need for regulatory agencies to be more proactive in enforcing the codes so as to achieve the desire goals for which the codes are enacted.
