EFFECTS OF CORPORATE GOVERNANCE ON FIRM PERFORMANCE OF SERVICE COMPANIES IN NIGERIA

Abstract

Over the years, many manufacturing companies in Nigeria have been struggling to grow, and some major players have been forced to relocate elsewhere or shut. Leave unchecked, Nigeria's chances of becoming true economy giant are dim. The phenomenon is an indication of impact of corporate failure and incompetence, although there is lack of recent studies that establish this. Drawing on Agency Theory, this study investigates how specific corporate governance practices; board diligence, independence, gender diversity, and board size influence the performance of Nigerian listed service companies. Adopting ex post facto research design, the author obtained secondary data from the annual reports of 22 listed service companies from 2012 to 2022, and later analysed using descriptive, correlation and multiple regression techniques. The findings show that three (board diligence, independence and gender diversity) of the four governance metrics analysed, positively affect Tobin-q but negatively affect ROA. On the hand, only board size has significantly positively impact on ROA, though result shows it has negative impact on Tobin Q. Based on these, the study deems standard governance structure an important mechanism for companies that want to optimize their profitability and market valuation. It is therefore recommended that firms for effective governance, companies should adopt optimal board size, promote gender equal representation in decision making, maintain a majority of independent directors, and ensure their board meets regularly.