Abstract
Although the consolidation and regulatory reforms were initiated in the Nigerian banking industry in 2004, the expected improvement in the operational performance and efficiency in the banking system has not been reflected in the overall health of the economy. It is in the light of the above, that this research examined the relationships between corporate governance mechanisms and performance of banks in Nigeria. This study used secondary data derived from publications of Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC) and Security and Exchange Commission (SEC) from 2006 to 2014. The Pearson Correlation was used to assess the relationships between the corporate governance variables and banks’ performance. Statistical Package for Social Sciences (SPSS) was used for the analysis. The study observed that a significant negative relationship exists between board size, board composition and the financial performance of banks, while a positive and significant relationship was observed between directors’ equity holding and banks’ performance. The study concludes that, the directors’ equity holding is paramount in boosting the performance of banks in Nigeria. Thus, this study recommends that the regulatory authorities should make sure that all directors own a reasonable amount of equity in the banks they oversee as this will move them to do their best to enhance the performance of these banks.
Highlights
Corporate governance has been an issue of serious concern around the world
The series of widely publicized cases of accounting improprieties recorded in the Nigerian banking industry in 2009 involving Oceanic Bank, Intercontinental Bank, Union Bank, Afri Bank, Fin Bank and Spring Bank were related to the lack of vigilant oversight functions by the board of directors, the board relinquishing control to corporate managers who pursue their own selfinterests and the board being remiss in its accountability to stakeholders (Uadiale, 2010)
The results showed a positive relationship between the corporate governance variables and the performance of banks in Nigeria
Summary
Corporate governance has been an issue of serious concern around the world. Several unpleasant happenings made corporate governance a very important topic in both developed and developing countries. The subject of corporate governance became a global matter after the collapse of high profile companies like Enron, the energy giant, WorldCom, the telecom giant and Xerox, the world producer of office equipment, shocked the business world with both the scale and age of their fraudulent practices. These organizations seem to indicate only a tip of a dangerous iceberg (Uwuigbe, 2011). The series of widely publicized cases of accounting improprieties recorded in the Nigerian banking industry in 2009 involving Oceanic Bank, Intercontinental Bank, Union Bank, Afri Bank, Fin Bank and Spring Bank were related to the lack of vigilant oversight functions by the board of directors, the board relinquishing control to corporate managers who pursue their own selfinterests and the board being remiss in its accountability to stakeholders (Uadiale, 2010)
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