Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria

Yimka Samson Akanfe Alalade; Babatunde Babasola Onadeko; Okezie Fine-Country Okezie

doi:doi:10.11648/j.ijfbr.20190506.14

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Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria

Yimka Samson Akanfe Alalade, Babatunde Babasola Onadeko, Okezie Fine-Country Okezie

Published in International Journal of Finance and Banking Research (Volume 5, Issue 6)

Received: 8 September 2019 Accepted: 4 October 2019 Published: 7 November 2019

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Abstract

Nigerian companies adopted the code of best practice on corporate governance in 2003, through which private and public firms are mandated to operate accordingly. Many companies have complied while some have failed to so. This study examined corporate governance practices eight years after (2010), given the instability in the political and economic environment under which they operated. The study also examined the relationship between corporate governance practices and firms’ financial performance in the selected manufacturing companies in Lagos State, Nigeria. The study employed a comparative analysis to gauge the changes to corporate governance practice between the years 2003 to 2010 by manufacturing companies. The companies were selected based on availability of data from the stock exchange in terms of activities of trading and existence of reports on corporate governance in the companies’ annual reports. The study used both descriptive statistics and econometrics method of analysis, using E-views 7 statistical software. The Panel data of the ten companies for the 8 years was used, employing ordinary least square (OLS) method of analysis. Consequently, the results of the descriptive statistics show that majority of the companies implemented the code of conduct that emphasizes appropriate composition of the board of directors and forecast of operations. Further analysis shows that there was positive relationship between the return of equity and legal compliance, though the relationship is weak given the value of R as 0.197. Also, there were weak relationships between return on equity (ROE) and board compliance as R = -0.4430 and proactive indicators R as - 0.2345. These imply that while the companies obey the regulations in term of board composition, legal compliance and production projections, which are the major concerns of this study. Meanwhile, some other variables impacted more on ROE.

Published in	International Journal of Finance and Banking Research (Volume 5, Issue 6)
DOI	10.11648/j.ijfbr.20190506.14
Page(s)	154-165
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Corporate Governance, Financial Performance, Return on Equity, Manufacturing Firms, Board Composition

References

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Yimka Samson Akanfe Alalade, Babatunde Babasola Onadeko, Okezie Fine-Country Okezie. (2019). Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria. International Journal of Finance and Banking Research, 5(6), 154-165. https://doi.org/10.11648/j.ijfbr.20190506.14

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ACS Style

Yimka Samson Akanfe Alalade; Babatunde Babasola Onadeko; Okezie Fine-Country Okezie. Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria. Int. J. Finance Bank. Res. 2019, 5(6), 154-165. doi: 10.11648/j.ijfbr.20190506.14

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AMA Style

Yimka Samson Akanfe Alalade, Babatunde Babasola Onadeko, Okezie Fine-Country Okezie. Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria. Int J Finance Bank Res. 2019;5(6):154-165. doi: 10.11648/j.ijfbr.20190506.14

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@article{10.11648/j.ijfbr.20190506.14,
  author = {Yimka Samson Akanfe Alalade and Babatunde Babasola Onadeko and Okezie Fine-Country Okezie},
  title = {Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria},
  journal = {International Journal of Finance and Banking Research},
  volume = {5},
  number = {6},
  pages = {154-165},
  doi = {10.11648/j.ijfbr.20190506.14},
  url = {https://doi.org/10.11648/j.ijfbr.20190506.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20190506.14},
  abstract = {Nigerian companies adopted the code of best practice on corporate governance in 2003, through which private and public firms are mandated to operate accordingly. Many companies have complied while some have failed to so. This study examined corporate governance practices eight years after (2010), given the instability in the political and economic environment under which they operated. The study also examined the relationship between corporate governance practices and firms’ financial performance in the selected manufacturing companies in Lagos State, Nigeria. The study employed a comparative analysis to gauge the changes to corporate governance practice between the years 2003 to 2010 by manufacturing companies. The companies were selected based on availability of data from the stock exchange in terms of activities of trading and existence of reports on corporate governance in the companies’ annual reports. The study used both descriptive statistics and econometrics method of analysis, using E-views 7 statistical software. The Panel data of the ten companies for the 8 years was used, employing ordinary least square (OLS) method of analysis. Consequently, the results of the descriptive statistics show that majority of the companies implemented the code of conduct that emphasizes appropriate composition of the board of directors and forecast of operations. Further analysis shows that there was positive relationship between the return of equity and legal compliance, though the relationship is weak given the value of R as 0.197. Also, there were weak relationships between return on equity (ROE) and board compliance as R = -0.4430 and proactive indicators R as - 0.2345. These imply that while the companies obey the regulations in term of board composition, legal compliance and production projections, which are the major concerns of this study. Meanwhile, some other variables impacted more on ROE.},
 year = {2019}
}

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TY  - JOUR
T1  - Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria
AU  - Yimka Samson Akanfe Alalade
AU  - Babatunde Babasola Onadeko
AU  - Okezie Fine-Country Okezie
Y1  - 2019/11/07
PY  - 2019
N1  - https://doi.org/10.11648/j.ijfbr.20190506.14
DO  - 10.11648/j.ijfbr.20190506.14
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 154
EP  - 165
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20190506.14
AB  - Nigerian companies adopted the code of best practice on corporate governance in 2003, through which private and public firms are mandated to operate accordingly. Many companies have complied while some have failed to so. This study examined corporate governance practices eight years after (2010), given the instability in the political and economic environment under which they operated. The study also examined the relationship between corporate governance practices and firms’ financial performance in the selected manufacturing companies in Lagos State, Nigeria. The study employed a comparative analysis to gauge the changes to corporate governance practice between the years 2003 to 2010 by manufacturing companies. The companies were selected based on availability of data from the stock exchange in terms of activities of trading and existence of reports on corporate governance in the companies’ annual reports. The study used both descriptive statistics and econometrics method of analysis, using E-views 7 statistical software. The Panel data of the ten companies for the 8 years was used, employing ordinary least square (OLS) method of analysis. Consequently, the results of the descriptive statistics show that majority of the companies implemented the code of conduct that emphasizes appropriate composition of the board of directors and forecast of operations. Further analysis shows that there was positive relationship between the return of equity and legal compliance, though the relationship is weak given the value of R as 0.197. Also, there were weak relationships between return on equity (ROE) and board compliance as R = -0.4430 and proactive indicators R as - 0.2345. These imply that while the companies obey the regulations in term of board composition, legal compliance and production projections, which are the major concerns of this study. Meanwhile, some other variables impacted more on ROE.
VL  - 5
IS  - 6
ER  -

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Author Information

Yimka Samson Akanfe Alalade

Department of Banking and Finance, Babcock University, Ilishan-Remo, Nigeria
Babatunde Babasola Onadeko

First City Monument Bank, Sagamu, Nigeria
Okezie Fine-Country Okezie

Federal Inland Revenue Service, Lagos, Nigeria

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Yimka Samson Akanfe Alalade, Babatunde Babasola Onadeko, Okezie Fine-Country Okezie. (2019). Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria. International Journal of Finance and Banking Research, 5(6), 154-165. https://doi.org/10.11648/j.ijfbr.20190506.14

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ACS Style

Yimka Samson Akanfe Alalade; Babatunde Babasola Onadeko; Okezie Fine-Country Okezie. Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria. Int. J. Finance Bank. Res. 2019, 5(6), 154-165. doi: 10.11648/j.ijfbr.20190506.14

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AMA Style

Yimka Samson Akanfe Alalade, Babatunde Babasola Onadeko, Okezie Fine-Country Okezie. Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria. Int J Finance Bank Res. 2019;5(6):154-165. doi: 10.11648/j.ijfbr.20190506.14

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@article{10.11648/j.ijfbr.20190506.14,
  author = {Yimka Samson Akanfe Alalade and Babatunde Babasola Onadeko and Okezie Fine-Country Okezie},
  title = {Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria},
  journal = {International Journal of Finance and Banking Research},
  volume = {5},
  number = {6},
  pages = {154-165},
  doi = {10.11648/j.ijfbr.20190506.14},
  url = {https://doi.org/10.11648/j.ijfbr.20190506.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20190506.14},
  abstract = {Nigerian companies adopted the code of best practice on corporate governance in 2003, through which private and public firms are mandated to operate accordingly. Many companies have complied while some have failed to so. This study examined corporate governance practices eight years after (2010), given the instability in the political and economic environment under which they operated. The study also examined the relationship between corporate governance practices and firms’ financial performance in the selected manufacturing companies in Lagos State, Nigeria. The study employed a comparative analysis to gauge the changes to corporate governance practice between the years 2003 to 2010 by manufacturing companies. The companies were selected based on availability of data from the stock exchange in terms of activities of trading and existence of reports on corporate governance in the companies’ annual reports. The study used both descriptive statistics and econometrics method of analysis, using E-views 7 statistical software. The Panel data of the ten companies for the 8 years was used, employing ordinary least square (OLS) method of analysis. Consequently, the results of the descriptive statistics show that majority of the companies implemented the code of conduct that emphasizes appropriate composition of the board of directors and forecast of operations. Further analysis shows that there was positive relationship between the return of equity and legal compliance, though the relationship is weak given the value of R as 0.197. Also, there were weak relationships between return on equity (ROE) and board compliance as R = -0.4430 and proactive indicators R as - 0.2345. These imply that while the companies obey the regulations in term of board composition, legal compliance and production projections, which are the major concerns of this study. Meanwhile, some other variables impacted more on ROE.},
 year = {2019}
}

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TY  - JOUR
T1  - Corporate Governance Practices and Firms’ Financial Performance of Selected Manufacturing Companies in Lagos State, Nigeria
AU  - Yimka Samson Akanfe Alalade
AU  - Babatunde Babasola Onadeko
AU  - Okezie Fine-Country Okezie
Y1  - 2019/11/07
PY  - 2019
N1  - https://doi.org/10.11648/j.ijfbr.20190506.14
DO  - 10.11648/j.ijfbr.20190506.14
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 154
EP  - 165
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20190506.14
AB  - Nigerian companies adopted the code of best practice on corporate governance in 2003, through which private and public firms are mandated to operate accordingly. Many companies have complied while some have failed to so. This study examined corporate governance practices eight years after (2010), given the instability in the political and economic environment under which they operated. The study also examined the relationship between corporate governance practices and firms’ financial performance in the selected manufacturing companies in Lagos State, Nigeria. The study employed a comparative analysis to gauge the changes to corporate governance practice between the years 2003 to 2010 by manufacturing companies. The companies were selected based on availability of data from the stock exchange in terms of activities of trading and existence of reports on corporate governance in the companies’ annual reports. The study used both descriptive statistics and econometrics method of analysis, using E-views 7 statistical software. The Panel data of the ten companies for the 8 years was used, employing ordinary least square (OLS) method of analysis. Consequently, the results of the descriptive statistics show that majority of the companies implemented the code of conduct that emphasizes appropriate composition of the board of directors and forecast of operations. Further analysis shows that there was positive relationship between the return of equity and legal compliance, though the relationship is weak given the value of R as 0.197. Also, there were weak relationships between return on equity (ROE) and board compliance as R = -0.4430 and proactive indicators R as - 0.2345. These imply that while the companies obey the regulations in term of board composition, legal compliance and production projections, which are the major concerns of this study. Meanwhile, some other variables impacted more on ROE.
VL  - 5
IS  - 6
ER  -

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