Abstract
At its core, the goal of a firm is to create sustainable profitability. And corporate governance should work to ensure this steady increase in corporate performance. Understanding the impact of corporate governance on firm profitability has warranted a special attention over time by different fields of scientific knowledge. This study was aimed to explore the relationship between corporate governance and profitability of firms, employing eight food and beverages firms listed in the Nigerian Stock Exchange from 2004 to 2014. The data were analysed using basic descriptive and inferential statistics with Ordinary Least Square multiple regression in a panel data setting. The results revealed that at 5 per cent level of significance, board size has positive relationship with return on equity and net assets per share. However, board composition has negative relationship with return on equity but with positive association with net assets per share. Board skills and competence has negative relationship with return on equity and net assets per share, while board gender diversity results indicated positive relationship with return on equity and net assets per share. Despite the mixed results, it can be argued that the empirical results support the contention that corporate governance has a positive relationship with profitability of firms. The study recommends among other things, that Nigerian food and beverages firms should adopt effective corporate governance practice as a panacea to firm growth and survival. Further research using corporate governance processes and profitability will not only add value in explaining performance of firms, but also add value to the academic literature.
Highlights
1.1 Statement of Research Problem Professor Abraham H
It is as against this background that this study tends to find out whether any linear relationship does exist between corporate governance and profitability for a sample of food and beverages firms listed in the Nigerian Stock Exchange for the period of 2004 to 2014; and looking at the roles of corporate governance proxies: board size, board composition, and board skills and competence, and board diversity with profitability indicators of return on equity and net assets per share
Against this background of examining the relationship between corporate governance and profitability, it is very much the purpose of this study to let in some fresh view on the role of corporate management in firm profitability and to make recommendations to enhance its effectiveness towards raising the bar for superior corporate performance
Summary
1.1 Statement of Research Problem Professor Abraham H. In particular, has about 180 million people that rely heavily on food and beverages as the primary source of their motivation to improve performance Whereas, it is only 23 publicly listed companies on the Nigerian Stock Exchange are involved in the food and beverages business. It is only 23 publicly listed companies on the Nigerian Stock Exchange are involved in the food and beverages business This presumably suggests for high profitability in the sector following the simple demand and supply mechanisms of economics. Remains the key factor that is highly depended upon to restoring profitability confidence of firms and keeps the business flagship fluttering and the economy strong, viable and vibrant This implies that corporate governance is a requisite for survival and a gauge of how predictable the system for doing business in any country is (Oluwafemi, et al 2013). It is as against this background that this study tends to find out whether any linear relationship does exist between corporate governance and profitability for a sample of food and beverages firms listed in the Nigerian Stock Exchange for the period of 2004 to 2014; and looking at the roles of corporate governance proxies: board size, board composition, and board skills and competence, and board diversity with profitability indicators of return on equity and net assets per share
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