CORPORATE GOVERNANCE AND FIRM PERFORMANCE: EVIDENCE FROM THE NIGERIAN BANKING SECTOR

The Nigerian banking sector is pivotal in driving economic growth, facilitating investments, and ensuring financial stability. However, challenges such as financial malpractices and ethical lapses have occasionally undermined stakeholder confidence. Integrating spirituality into accounting practices, known as spiritual accounting, offers a pathway to address these challenges by embedding ethical and moral considerations into financial decision-making. SA enhances ethical values by fostering integrity, professional identity, and moral excellence, ensuring adherence to accounting standards and pronouncements. This study examines the impact of spiritual accounting on the profitability of Nigerian banks, focusing on its role in promoting financial transparency, corporate governance, and ethical banking practices. This study employs a quantitative research approach to examine the relationship between financial transparency and financial performance indicators, including Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). A regression analysis was conducted using financial data from selected commercial banks in Nigeria over a five-year period (2019–2023). The study population comprises all 24 commercial banks licensed by the Central Bank of Nigeria (CBN). A purposive sampling technique was used to select 10 banks based on their market share, financial disclosure practices, and data availability. Secondary data were obtained from annual financial reports, Nigerian Stock Exchange (NGX) filings, and regulatory disclosures from the CBN. Transparency in financial reporting was measured using an index based on compliance with International Financial Reporting Standards (IFRS) and corporate governance guidelines. Statistical analysis was conducted using regression models to assess the impact of transparency on ROA, ROE, and NIM. The study’s findings reveal a significant positive relationship between financial transparency and financial performance, demonstrating that banks with higher transparency in financial reporting achieve higher profitability, greater investor confidence, and improved operational efficiency. These results support the argument that spiritual accounting, by fostering ethical banking practices and corporate governance, enhances long-term financial sustainability. The study recommends strengthening financial reporting standards, enforcing corporate governance frameworks, and incorporating spiritual values into financial decision-making to promote sustainable banking practices in Nigeria.

Corporate governance (CG) is a set of principles that should be included into every aspect of the firm in order to ensure accountability and responsibility. The purpose of this research is to look at the state of corporate governance (CG) in banking sector of conventional banks and Islamic banks. Because the rules, regulations, and operating processes of conventional and Islamic banks differ significantly, the corporate governance (CG) practices of these two banking sectors are likewise distinct. In this work, the authors attempt to give a clear comparative assessment of corporate governance (CG) practices in these two banking sectors. This research looked at four dimensions of corporate governance: board size, board diversity, board diversity, and CEO duality. Return on Equity (ROE) and Return on Assets (ROA) have been used to evaluate banking performance. Regression analysis is used to evaluate the banking performance of the said banking sectors. It is found that BS, IND and BD have positive impact on ROE in Islamic banks sample. On the other hand, in terms of the coefficient of independent variables from sample banks of conventional sector are found to be negative influence on ROE in where IND and CEO duality shows significant result. Both conventional and Islamic banks are under pressure to enhance their corporate governance (CG) practices, since both banking sectors are seeing considerable improvements. However, when compared to conventional banks, Islamic banks lag behind in terms of corporate governance (CG). Companies must comprehend the advantages of implementing strong governance techniques and accompanying activities that aid in enhancing financial performance.

The importance of good corporate governance for business development cannot be ignored. Therefore the Nigerian banking sector requires the practice of good corporate governance for its stability, growth and development. This has become evident due to the role of the banking sector as a driver of economic development. Therefore in this chapter the corporate governance practices in the Nigerian banking sector are discussed vis-á-vis corporate governance codes therein. The operationalization of the Central Bank of Nigeria (CBN) Code (2006) is critically examined, as well as the introduction of the revised CBN Code (2014), by discussing the updates as presented in the CBN Code (2014). The author explores the enhancement and strengthening of the whistleblowing mechanism vis-á-vis good corporate governance, as detailed in the whistleblowing guidelines of the CBN Code (2014). To further strengthen corporate governance in the Nigerian banking sector, useful recommendations on enhancing corporate governance practices are proffered.

This study examines financial regulation and banking sector performance in Nigeria. Specifically, the study determines the impact of reforms on banking sector performance and also assesses the nexus between capital adequacy and banking sector performance. Time series data for the period 1993 to 2014 was used. As an analytical tool, the study uses unit root test to determine the stationary state of the variables. We also employed the Johansson co-integration and error correction model (ECM) statistical techniques to establish both short-run and long-run dynamic relationships between the endogenous and exogenous variables. The empirical findings indicate that financial regulation significantly impacts the banking sector performance while financial regulation has both short-run and long-run dynamic relationships with the banking sector performance in Nigeria. It was found that the four-period lag of capital adequacy negatively affects banking sector performance and is not statistically significant. The paper suggests that the Central Bank of Nigeria (CBN) should continually make public the impacts that the various financial regulations and reforms have on the performance of Nigerian banks. Majority of the policies on financial regulation by the apex bank (CBN) need to be long-run which can enable confidence of stakeholders, shareholders and the general public in the Nigerian banking industry when critically evaluated.

Orientation: Several breaches continue to occur in Nigeria’s banking sector even with the litany of regulation put in place. These regulations require that banks disclose certain types of information, for accountability and transparency. Research purpose: To determine the extent of corporate governance disclosures in annual reports of Nigerian banks taking into cognisance the provisions of laws and codes applicable to Nigerian banks as well as acclaimed national codes and international guiding principles on corporate governance. Motivation for the study: Disclosures of corporate governance practices in the annual reports are a subtle indication of the level of compliance with provisions of relevant laws and codes. Research design, approach, and method: The study employed the qualitative content analysis that included a checklist based on the provisions of the Central Bank of Nigeria (CBN) code and acclaimed national codes and guiding principles to test the level of compliance disclosed by commercial banks in their annual reports. Main findings: The results show substantial corporate governance disclosures by all the banks except for two corporate governance pillar scores rights and functions of shareholders and engagement with shareholders’ associations that received little or no attention in the annual reports of the assessed banks. Practical/managerial implications: Disclosures do not necessarily imply that preparers comply with the spirit of corporate governance. A governance code that is based on ethics as a foundation should be considered rather than the current comply or else regime. Contribution/value-add: The article identifies the gap that the comply or else regimes do not necessarily succeed as preparers of report tend to tick the box to comply with the regulation rather than buying into the spirit of that regulation.

Corporate governance describes the expectations of stakeholders on how corporations are governed. These expectations or perceptions keep changing; and because they keep changing, the managers of corporations and indeed all stakeholders need to keep pace with these expectations. In this paper, the researcher reviewed the various attempts made by Central Bank of Nigeria (CBN) at entrenching corporate governance in Nigerian banks with a special focus on whether banks in Nigeria are complying with the code of corporate governance post consolidation (2005-2009). The study employed an interpretivist methodology and collected data through observation, document analysis and a review of the CBN case. The case x-rayed the regulator-induced banking consolidation reforms and the compliance with the mandatory code of corporate governance for banks in Nigeria post consolidation as well as issues bordering on supervisory framework, architecture and risk management. The research revealed that banks in Nigeria are committed to conforming to the dictates of the code of corporate governance. The study further revealed that these banks are struggling to achieve a balance between performance and conformance, thereby calling for a rethink on the relationship between corporate governance and risk management. The research made far reaching recommendations on how CBN and also the banks can keep pace with the ever changing dictates of corporate governance in Nigeria.

Purpose: The corporate environment in Nigeria is believed to have experienced cases of earnings manipulations which have brought doubt to the credibility of financial reporting resulting in corporate failure. These have attracted the attention of practitioners, regulators, researchers and other stakeholders in getting possible solutions to poor quality of financial reporting in corporate businesses. Therefore, the purpose of the study is to investigate the effect of board diversity on financial reporting quality of listed Deposit Money Banks (DMBs) in Nigeria. Methodology: The study uses panel data regression technique for data analysis. Data was obtained from the audited annual reports and accounts of the banks over the period 2006 - 2017. Robustness tests such as normality test of standard error, multicollinearity and heteroscedasticity tests were carried out to validate the results. Findings: The study found that board remuneration, percentage of women board members and audit committee gender have significant positive effect on financial reporting quality implying lower earnings management. Also, board experience and board reputation have negative but weak effect on financial reporting quality. However, board ownership has a positive and significant effect on earnings management but board nationality and board age have positive but insignificant effect on financial reporting quality of banks. The two control variables (financial performance and leverage have significant negative influence in curtailing managers’ opportunistic tendencies. Policy Implications: The findings have important policy implication for the Central Bank of Nigeria (CBN) which is striving to improve transparency and quality of financial reporting in the financial sector. It also have policy implication which enables the CBN and the DMBs to reap the benefit of having a well re-structured, re-composed, re-organized and diversified board along the findings of the study. Originality: The originality of study is in the use of comprehensive lists of board characteristics in the Nigerian banking sector. The study originality is also in the use of the entire population of the listed DMBs giving it a wider coverage and therefore more generalizable.

Effective currency reserve management is critical for maintaining financial stability and operational efficiency in Nigerian banks. Cash forecasting accuracy plays a vital role in ensuring the optimal allocation of currency reserves, minimizing liquidity risks, and meeting customer demands. However, Nigerian banks face persistent challenges in cash forecasting, including inaccuracies due to inadequate data integration, manual processes, and limited adoption of advanced technologies. This study aims to conceptualize an improved cash forecasting framework to enhance currency reserve management in Nigerian banks. The proposed framework incorporates advanced technologies such as artificial intelligence (AI), machine learning, and big data analytics to address forecasting challenges. AI-driven predictive models enable more accurate demand forecasting by analyzing historical transaction data, seasonal trends, and macroeconomic indicators. Machine learning algorithms adapt to dynamic market conditions, enhancing real-time decision-making capabilities. Big data analytics facilitates the integration of diverse datasets from banking operations, external financial environments, and customer behavior to create comprehensive forecasting models. The framework also emphasizes the importance of institutional capacity building, focusing on upskilling bank personnel through training programs to maximize the benefits of these advanced technologies. Additionally, regulatory compliance and alignment with the Central Bank of Nigeria's policies are critical to ensure seamless implementation and scalability of the framework across the banking sector. Preliminary analysis indicates that the adoption of the proposed framework can reduce forecasting errors by up to 50%, optimize cash allocation, and enhance the overall efficiency of currency reserve management. Furthermore, it supports improved customer satisfaction by ensuring the availability of cash during peak demand periods and reducing transaction delays. This conceptual framework provides a roadmap for Nigerian banks to address cash forecasting inaccuracies, aligning with global best practices and fostering financial stability. Future research will focus on pilot-testing the framework in selected banks and assessing its long-term impact on currency reserve management.

Following the consolidation exercise in the banking sector in 2006 in Nigeria, Corporate Governance practices in the banking sector have received significant attention. The 2009 banking crisis underscores the need for financial regulators to take more than a cursory look at corporate governance practices in the sector. Previous studies on corporate governance and bank performance have mixed outcomes. Premise on this, this study examines the impact of corporate governance on the financial performance of tier-one banks in Nigeria. Corporate governance was operationalized using; board size, board composition, board (gender) diversity, and board meetings. While Return on Equity (ROE) and Return on Asset (ROA) were proxies for financial performance. The annual reports of five sampled banks over a period of ten years (2009-2018) were used to collect secondary data, while primary data was obtained via a survey of 115 respondents. Descriptive (Min., Max., Mean, Standard Deviation, Skewness and Kurtosis) and Inferential (Pearson Correlation, ANOVA, and Multiple Regression) statistical tools were used to measure the relationship between the corporate governance variables and financial performance. The study findings reveal that the four corporate governance mechanisms accounted for 9% and 15% of the variances in ROE and ROA respectively. Specifically, the results show that board size and board meetings have a negative but statistically significant relationship with financial performance. While board composition and board (gender) diversity show a positive relationship with performance, the relationship is not statistically significant with ROE and ROA for board composition. Though board (gender) diversity reveals a statistically significant relationship with only Return on Equity, the study recommends that stakeholders must ensure that bank board’s operate with the optimal board size, and also effort must be made to improve board composition and board (gender) diversity; as these will increase investors’ confidence and impact positively on the performance of the banks.

Banking and corporate governance reform is an ongoing phenomenon which has received intense global attention after the 2008 global financial crisis. This is particularly true of Nigeria where banks constitute a dominant position of the financial sector. It has compelled many financial and non-financial regulators in Nigeria such as the Central Bank of Nigeria and the Securities and Exchange Commission to revise the codes of best practices for banks and other public companies overtime with a new single code of corporate governance [the national code of corporate governance] set to be released by the Financial Reporting Council of Nigeria.This paper makes a contribution to the existing literature on the state of corporate governance development in the Nigerian banking and non-banking sector, the impacts of the banking regulations and the efforts put in place at ensuring that banks are well governed. It also addresses the issue of compliance, disclosure and harmonisation of codes in Nigeria. It argues that while standards and codes are being enacted and revised by the CBN, the SEC and now FRCN, there is greater need for the Nigerian internal and external environments (such as the socio-political, economic and cultural systems) to support the reforms. There is also need for better enforcement, a renewed transparency and total compliance to the spirit and letter of the code in Nigeria.

The study investigated the impact of implementing cloud accounting on the quality of financial reporting in the banking industry in Nigeria. A survey design was adopted, which was descriptive, targeting professional accountants at the 24 deposit money banks as quoted by Central Bank of Nigeria (CBN, 2024). As reported by the CBN (2024 survey), the banking sector has 3,682 professional accountants. A sample size of 361 respondents was obtained using Taro Yamane sampling formula and data were collected using a well structured, closed ended questionnaire that was done electronically through Google Forms. The research questions were analyzed by use of descriptive statistics, which is the mean and standard deviation, whereas the hypotheses were tested using linear regression. The results showed that the use of cloud accounting is slowly growing among Nigerian banks where there is indication that it is used both in the financial transactions and in the departmental finance operations. The adoption is however not complete with traditional systems being still in use in various accounting processes. The major factors that have led to adoption are cost saving, availability of financial information, assistance to management, and regulatory compliance needs, whereas poor IT infrastructure remains a significant limitation. The advantages mentioned are that there are lower costs of operation, timely availability of financial data, better collaboration, and better financial planning. However, obstacles like the expense of implementation, poor internet connectivity, lack of technical skills, resistance by the employees and data security remain as barriers to complete implementation. The regression results revealed that the adoption of cloud accounting can be used to explain 48%t of the variation in the quality of the reporting, which is a factor that has a significant positive impact.

This study explores the effect of Indonesia's good corporate governance code on board diversity: ethnicity, nationality, gender, qualification, experience, composition, and multiple directorship diversity. The revised corporate governance code provides guidelines for better corporate governance practices. Therefore, board attributes such as diversity are among the best corporate governance practices. Two hundred and three of Indonesia's listed companies (1,421 firm years) are research objects. The data was collected from company annual reports and other internet sources. The data was analyzed using a pair sample t-test and distribution frequency. Based on the pair sample t-test, Oversight board ethnicity diversity, nationality diversity, gender diversity, and board composition significantly differ between pre- and post-revised codes. In addition, management board nationality diversity and gender diversity are also differences between the pre-and post-revised code. In most cases, updating code improves diversity, except for the Oversight Board's ethnic diversity. This study also provides the detailed average number and percentage of board diversity pre- and post-the-updated code of good corporate governance. This study implies that the revised code of good corporate governance increases the board diversity of Indonesian-listed companies. Since the last revised code was released in 2006, a new updated code of good corporate governance has been demanded.

In the evolving financial landscape of Nigeria, the interplay between monetary policy and digitalization significantly influences the performance metrics of banks. This study explores the multifaceted impact of these two critical factors on the Nigerian banking sector. Monetary policy, orchestrated by the Central Bank of Nigeria, regulates the economy's money supply, affecting banks' lending behaviors and liquidity. Digitalization, on the other hand, offers a transformative potential for banks to enhance operational efficiency, customer experience, and service delivery through technological advancements. The study examines how money supply, lending rate and digitalization (proxied by mobile cell subscription) affect banks’ financial performance, focusing on bank credit and liquid assets, while controlling for inflation and exchange rate variables. It also examines the interaction between digitalization and monetary policy variables on bank performance. Employing an interactive multiple regression model, the study analyzes time series data from 1996 to 2022 sourced from the World Bank. Findings indicate that while stringent monetary policies can constrain bank performance by tightening credit and reducing liquidity, digitalization provides an opportunity for banks to counteract these effects through enhanced efficiency. However, the successful integration of digital technologies is contingent upon adequate investment, regulatory support, and strategic alignment with the banks’ core objectives. The study concludes that Nigerian banks must adeptly manage monetary policy fluctuations and leverage digitalization to sustain and enhance performance. These insights could guide policy formulation and strategic decision-making within the banking industry.

Social and economic activities, like religion, entertainment, education, research, and the production of other goods and services, are carried on by different types of organizations, for example, corporations, proprietorships, partnerships, mutuals and nonprofits. There is competition among organizational forms for survival. The form of organization that survives in an activity is the one that delivers the product demanded by customers at the lowest price while covering costs. The characteristics of residual claims are important both in distinguishing organizations from one another and in explaining the survival of organizational forms in specific activities. This paper develops a set of propositions that explaim the special features of the residual claims of different organizational forms as efficient approaches to controlling agency problems. © M. C. Jensen and E. F. Fama, 1983 Michael C. Jensen, Foundations of Organizational Strategy Chapter 6, Harvard University Press, 1998. Journal of Law & Economics, Vol XXVI (June 1983) This document is available on the Social Science Research Network (SSRN) Electronic Library at: http://papers.ssrn.com/sol3/paper.taf?ABSTRACT_ID=94032 AGENCY PROBLEMS AND RESIDUAL CLAIMS

Board diversity has been a hot topic for several years. However, it is only in recent years that pertinent questions have been asked about what is actually meant by board diversity and what would constitute a board with an ideal diversity. In the past the debate on board diversity has always been dominated by the lack, or very low numbers, of females on boards. This has been a fact in most countries with sophisticated corporate law and corporate governance systems in place. The issue of female representation on boards still dominates the board diversity debate, but other forms of diversity, including age, cultural, nationality and race have also become part of the debate. The quest is to find answers to questions like whether a diversified board would be better, and whether diversified boards will ensure a better return for investors; in other words, whether there is a ‘business case’ to be made out to have diversity on a board. Many studies have been done, but the answer is still evasive. This is not totally unexpected as the criteria used for these studies differ and the circumstances and complexities of business are such that a final conclusion will probably never be reached. In this article we focus on the board diversity debate in Europe, Australia and South Africa – three completely different parts of the world. In addition we devote Part V to put the topic of board diversity in a broader context, but paying particular attention to gender diversity.