Impact of Corporate Restructuring on Value Creation in the Nigerian Banking Industry

Abstract

This study aims at determining the impact of corporate restructuring on the creation of shareholder value in the Nigerian banking industry. Secondary data are collected in respect of all the 21 banks listed on the Nigerian Stock Exchange. The data are analysed using the Difference in Means (Descriptive Statistics) Method. The study establishes the fact that in the Nigerian banking industry, mergers, acquisitions and capital restructuring have significant impacts on value creation; but capital restructuring has the greatest positive impact on the creation of shareholder value. It is also found that most banks have to restructure as a result of problems like weaknesses in corporate governance, weak ownership structure, conflict of interest between management and shareholders, environmental problems, and internal problems. The findings of this study imply that banks involved in mergers may not be able to create or enhance value for their shareholders. It is recommended that industry regulators and practitioners seeking to create value for shareholders should, among other things, focus on capital restructuring and acquisition and strategies that favour growth, expansion and performance improvement.