Corporate Governance Mechanism and Shareholders Wealth Maximization in Quoted Commercial Banks in Nigeria

Abstract

This study examined the effect of corporate governance mechanism and shareholders wealth maximization of quoted commercial banks in Nigeria. The purpose is to examine how corporate governance variables affect shareholders wealth of quoted commercial banks in Nigeria. Panel data was sourced from financial statement of the quoted commercial banks from 2011 to 2020. Return on equity and return on assets were modeled as a function of board size, board composition, board independence and directors shareholdings. Panel data Ordinary least square method was used as data analysis technique. The study found that 65.7 and 70 percent of return on equity and return on assets were explained by variation in corporate governance variables. Beta coefficient of the variables found that board size and board composition have positive but no significant effect on return on equity of the quoted commercial banks while board independent and directors equity holding have negative effect on the return on equity of the quoted commercial banks. The study found that the independent variables have positive effect on return on assets of the quoted commercial banks except directors’ equity holding. From the findings, the study concludes that corporate governance variables have greater effect on return on assets than return on equity of the quoted commercial banks. From the findings, the study recommends the all corporate governance code from the regulatory authorities should well complied with by the management of the commercial banks. Directors equity holding should be reduce and its objectives integrated with the management objective of maximizing shareholders wealth