ABSTRACT

This study investigated the relationship between corporate governance structures and firm financial performance in the Nigerian banking industry. Other objectives tested include, to examine the relationship between board size and financial performance, to investigate if there is a significant difference in the financial performance of banks with foreign directors and banks, to appraise the effect of the proportion of non- executive directors on the financial performance of banks in Nigeria, to investigate if there is any significant relationship between directors’ equity interest and the financial performance of banks in Nigeria among others. Pearson’s Correlation coefficient and regression were employed to analyse the work. The results showed that there is no significant relationship between Board size and financial performance of banks in Nigeria, there is no significant difference in the means of the financial performance of Nigerian banks with foreign directors and banks without foreign directors. The relationship between the proportion of non-executive directors and the financial performance of Nigerian banks is not significant. The research recommends that the efforts to improve corporate governance should focus on the value of the stock ownership of board members, since it is positively related to both future operating performance and to the probability of disciplinary management turnover in poorly performing banks. Proponents of board independence should note with caution the negative relationship between board independence and future operating performance. Also, banks should be allowed to experiment with modest departures from the current norm of a “supermajority independent” board with only one or two inside directors.

TABLE OF CONTENTS

Title                                                                                                                                         i

Declaration                                                                                                                              ii

Certification                                                                                                                            iii

Dedication                                                                                                                              iv

Acknowledgements                                                                                                                v

Table of Contents                                                                                                                   vi

List of Tables                                                                                                                          x

Abstract                                                                                                                                  xi

CHAPTER ONE

INTRODUCTION

1.1  Background of the Study                                                                                                 1

1.2  Statement of Problems                                                                                                      3

1.3  Research Objectives                                                                                                          6

1.4  Research Questions                                                                                                           7

1.5  Research Hypotheses                                                                                                        7

1.6  Scope of the Study                                                                                                           8

1.7  Significance of the Study                                                                                                 9

1.8  Definition of Terms                                                                                                          9

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Conceptual Framework                                                                                                     12

2.1.1 Concept of Corporate Governance                                                                                12

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2.1.2 Historical Overview of Corporate Governance                                                             14

2.1.3 Principles for Corporate Governance                                                                             16

2.1.4 Benefits of Good Corporate                                                                                          17

2.1.5 Corporate Government Codes                                                                                       18

2.1.5.1 Provision of New Codes that Pertain to Shareholders                                               18

2.1.5.2 Provision of New Codes to Directors includes                                                          18

2.1.6 Corporate Mechanism                                                                                                    19

2.1.6.1 Shareholders                                                                                                               19

2.1.6.2 Debt Holders                                                                                                              19

2.1.6.3  Board of Directors                                                                                                     20

2.1.6.4  Management Team                                                                                                    20

2.1.7  Corporate Governance and Banks                                                                                20

2.1.7.1 Regulations and Supervision as element of Corporate Governance in Banks            21

2.1.7.2 Corporate Governance in First Bank Nigeria Plc                                                        21

2.1.7.3  Corporate in Guaranty Trust Bank                                                                              22

2.1.7.4 Corporate in United Bank of Africa                                                                             23

2.1.8  Corporate and Financial Performance                                                                            24

2.1.9  Performance Proxies                                                                                                      25

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2.1.9.1 Return on Asset (ROA) and Financial Performance                                                      25                                       

2.1.9.2 Return on Equity (ROE) and Financial Performance                                                    25

2.1.9.3 Earning Per Share (EPS) and Financial Performance                                                   26                                     

2.2 Theoretical Framework                                                                                                       26

2.2.1 Stakeholders Theory                                                                                                         27

2.2.2 Stewardship Theory                                                                                                          28

2.2.3 Agency Theory                                                                                                                 30

2.2.3.1 Agency Relationship in the context of the firm                                                            32

2.2.3.2 Agency Problems                                                                                                          32

2.3 Empirical Review                                                                                                                33

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research Design                                                                                                               36

3.2 Study Population                                                                                                              37

3.3 Sample Size                                                                                                                       37

3.4 Data Gathering Method                                                                                                    38

3.4.1 Types and Sources of Data                                                                                            38

3.4.2 Research Instruments                                                                                                    38

3.4.3 Method of Data Presentation                                                                                         38

3.5 Model Specification                                                                                                          39

3.6 Data Analysis Methods                                                                                                    40

3.6.1 Content Analysis                                                                                                           43

CHAPTER FOUR

DATA PRESENTATION, DATA ANALYSIS AND DISCUSSION OF FINDINGS

4.1 Data Presentation  and Analysis                                                                                       46          4.2 Data Analysis                                                                                                                        47        4.2.1 Pearson’s Correlation Coefficient Analysis                                                               47 4.2.2 Regression Analysis                                                                                                  52       4.3 Test of Hypotheses                                                                                                            56   

CHAPTER FIVE

SUMMARY, RECOMMENDATIONS AND CONCLUSION                                                                                                                                                                                            

5.1 Summary of Findings                                                                                                       62

5.2 Conclusion                                                                                                                        67

5.3 Recommendations                                                                                                                        68

REFERENCE