EMPIRICAL EVALUATION OF THE IMPACT BOARD COMPOSITION AND SIZE ON GOING CONCERN: EVIDENCE FROM NIGERIAN PETROLEUM MARKETING COMPANIES

Abstract

Corporate Governance (CG) is generating a lot of concern among academicians, practitioners, law-makers and companies stakeholders due to the fact that it has to do with a system through which businesses are directed and controlled. Where companies are effectively and efficiently governed the chances of bankruptcy is assumed to be minimal i.e. going concern (GC) of companies. However, the financial scandals of early part of the twenty first century which resulted in the collapse of high-profile companies in the developed countries and some companies in Nigeria question the significance of corporate governance in relation to the perpetual existence of companies (Going Concern)  This study evaluates the impact of corporate governance (board size and board composition) on the going concern (probability of bankruptcy) of the seven Nigerian petroleum marketing firms out of the nine that are listed on the Nigerian Stock Exchange. The research design used for this study is the ex-post factor research design which is the use of historical data to make decision; data were collected from the Annual reports and accounts of the sampled companies covering the period of five years (2013 – 2017). Descriptive statistics, correlation matrix and panel data analysis (Random-effect GLS regression techniques) were utilized as analytical tools in the study. The results indicate that board size board composition has no significant impact on the going concern; has no significant impact on the going concern. It is recommended that, to enhance the level of influence of corporate governance on going concern to higher positive level in the Nigerian petroleum marketing industry, sufficient board size relative to the scale and complexity of the company’s operations should be put in place, but should not be less than five (5) members as it is stipulated in the Code of Corporate Governance 2006, Also, ensuring full compliance with the Code of Corporate Governance (2006) and the provisions of relevant accounting standards is another ethical way of making corporate governance having strong impact on the going concern of firms in the Nigerian petroleum marketing industry. The adoption of these findings will further strengthen the perpetual existence (going concern) of the Nigerian petroleum marketing industry.