EFFECT OF CORPORATE GOVERNANCE ON FINANCIAL PERFORMANCE. A STUDY OF SELECTED BANKING FINANCIAL INSTITUTIONS IN NIGERIA.

Abstract

The study assessed effect of corporate governance on financial performance. Specifically, the study used First Bank of Nigeria PLC, GT Bank Plc, Zenith Bank Plc, UBA Plc, and ACCESS bank Plc as case study. In line with the broad objective, the study investigated the effect of Audit Committee, Board Size, and board composition on Return on Asset (ROA) of selected banks. The ex-post facto research design was adopted in this study. Data was collected using secondary source of data, while the pooled regression model was used in this study to ascertain the relationship between the variables in the study. Findings of the study revealed that: Audit Committee have a positive and significant effect on Return on Asset (ROA), Board size has a negative and significant effect on effect on Return on Asset (ROA), while board composition does not significantly affect Return on Asset (ROA) of selected banks. It was recommended that: the audit committee members should be permitted to operate independently, and the audit committee's membership should be reviewed on a regular basis to increase transparency in the audit committee's performance of its duties. Additionally, banking financial institutions and other organizations should have a reasonable board size that includes more non-executive directors (representatives of the shareholders) than executive directors. It was recommended that a balanced board composition be implemented in response to the observed association between board composition and the financial performance of deposit money institutions as measured by ROA (with emphasis on women inclusion in board).