Effect of Board Size, Board Composition and Board Meetings on Financial Performance of Listed Consumer Goods in Nigeria

El-Maude Jibreel Gambo,Shamaki Aranpu Rimamshung,Bawa Ahmed Bello

doi:10.5539/ibr.v11n6p1

Abstract

The central thrust of this study is to examine the effect of board size, board composition and board Meetings on the financial performance of listed consumer goods in Nigeria over the period of ten years from 2006 to 2015. The study uses expo factor research design and purposive sampling technique (filter) as research design and sampling technique. The population of the study is twenty (20) listed consumer goods companies in Nigeria and a sample size of ten (10) companies were studied. The data was analysed by means of descriptive statistics, Correlation and Regression analysis using STATA (version 11). The descriptive result reveals that return on assets has minimum and maximum values of -0.0400 and 0.4700 respectively and the mean and standard deviation of 0.1199 and 0.1038 respectively. The study made use of secondary data generated from annual report and account of the sampled companies through Nigeria Stock Exchange fact book. The findings include the following: Board size is negatively significant at 1% with T. Value of _2.70, Board composition is positively significant at 1% with T- Value of 2.15 and finally, Board meeting is negatively insignificant with T- Value of _1.45. This study concluded that smaller board size are more effective than larger board size, good proportion of board composition is a good factor to enhance ROA of listed consumer goods companies in Nigeria and frequent board meeting will have negative effect on the ROA of listed consumer goods companies in Nigeria because it will limits the chances for external directors to conduct a meaningful oversight over management. Hence the study recommends among others; That smaller board size should be used in listed consumer goods companies in Nigeria to enhance their ROA, the listed consumer goods companies should continue to maintain good proportion of independence directors. The listed consumer goods companies in Nigeria should discourage unnecessary board meetings to allow board of directors perform other oversight function on the management so as to enhance the ROA of listed consumer goods companies in Nigeria.

Highlights

Board structure of an organisation is the organisation‟s core layer which is critical to the corporate survival and or otherwise of an organization
From the coefficient value of 0.0364 one can say that there is a positive relationship between Bcomp and Return on assets (ROA) of consumer goods companies listed in Nigeria .This signifies that when Bcomp increase by 1% return on assets will increase by 3.6%.The result shows that the Null Hypothesis two that state that bcomp does not has significant impact on ROA does not hold water and must be rejected
The negative coefficient signifies that board meeting and firm performance of listed consumer goods companies in Nigeria are inversely related meaning that whenever Bm increase by 1% the firm performance will decrease by 63% .The result provide an evidence to accept the Null Hypothesis that state Bm has no significant impact on ROA of consumer goods companies listed in Nigeria

Summary

Introduction

Board structure of an organisation is the organisation‟s core layer which is critical to the corporate survival and or otherwise of an organization. The legal responsibilities of boards and board members vary with the nature of the organisation and with the jurisdiction within which it operates (Mousa & Al-manaseer, 2012). This by implication means the size and the composition of the board plays a pivotal role towards the achievement of the mandate of the board. Board size of an organisation is about the number of directors both the executive and the non executive. Board composition is the proportion of non executive directors (independence) to total number of directors in an organisation (Adekunle & Aghedo, 2014)

Objectives

Methods

Findings

Conclusion