CORPORATE GOVERNANCE AND INNOVATION PERFORMANCE OF MANUFACTURING FIRMS IN NIGERIA
Abstract views: 80
/ 
PDF downloads: 78
Keywords:
Good Governance, Organizational Performance, Manufacturing FirmsAbstract
Despite extensive discussions on regulatory agency on the relationship between corporate
governance and organisational performance, it is not new that most extant literature and empirical
investigations do not provide detailed explanation on relationship between corporate governance and firm
innovation performance. Although, some empirical studies revealed that there is negative relationship
between the two variables. Thus, this study examined the extent to which corporate governance and
organisational performance. The study sampled listed manufacturing companies in Nigeria stock
exchange. The source of data was obtained from extracted data on activities of the selected firm period
from 2008 to 2017. The method of data analyses for the study are Hausman test, cross sectional panel
multiple regression, fixed effect result, random effect, pool effect. These methods are employed to
examine the extent of relationship and interaction impact on the selected variables. Descriptive statistics
and correlation matrix was used to pre-test the data in order to determine whether they are normally
distributed. Thus, the study revealed that positive and significant relationship between board size, board
independence and audit committee with firm financial performance. The study further indicated that
ownership structure has negative and insignificant relationship with firm financial performance. The
study asserted that the dimensions selected for measuring corporate governance mechanism on firm
financial performance was adequately observed. The director ownership is quite low at 4% and has an
inverse relationship with the performance measures. The average board size is found to be 9 which is in
concordance with the Securities and Exchange Commission Code of Corporate Code of Corporate
governance. The audit committee is on the average 49% independent which results in an impact on
performance based on return on equity and profit margin. The study recommended that member on
corporate governance in different companies should carry constantly carry out an audit of compliance on
corporate governance as its affect firm financial performance.
Downloads
References
Ajagbe, A. M. & K. Ismail (2014). Factors Influencing Venture Capital Assessment of High Growth Companies in Malaysia. International Journal of Entrepreneurship and Small Business, 21(4), 457-494.
Ajagbe, A. M. (2007). The Impact of Strategic Planning on Effectiveness of Marketing Operations: Case of NEPA. An Unpublished MBA Thesis Submitted to the Graduate School, Ambrose Ali University, Ekpoma, Nigeria.
Ajagbe, A. M., Oluyinka, S. & C. S. Long (2011).The Relationship between Strategic Planning and the Effectiveness of Marketing Operations. International Journal of Innovation, Management and Technology, 2(5), 390-396.
Abu-Tapanjeh, A. (2006). Good corporate governance mechanism and firms' operating and financial performance. Insight from the perspective of Jordan industrial companies. Journal of King Saud University, 19(2), 101-121.
Adusei, M. (2011). Board structure and bank performance in Ghana. Journal of Money, Investment & Banking, 200(2), 72-84.
Aljifri, K. & Moustafa, M. (2007). The Impact of Corporate Governance Mechanisms on the Performance of UAE Firms: An Empirical Analysis. Journal of Economic and Administrative Sciences, 23 (2), 71-93.
Al-Manaseer, M. F., Al-Hindawi, R. M., Al-Dahiyat, M. A., & Sartawi, I. I. (2012). The Impact of Corporate Governance on the Performance of Jordanian Banks. European Journal of Scientific Research, 67(3), 349-359.
Amran, N. A. (2011). Corporate governance mechanisms and company performance: Evidence from Malaysian companies. International Review of Business Research Papers, 7(6), 101-114.
Babatunde, M. A. & Olaniran, O. (2009). The effects of internal and external mechanism on governance and performance of corporate firms in Nigeria. Journal of Corporate Ownership and Control, 7 (2), 330-344.
Bathula, H. (2008). Board Characteristics and Firm Performance: Evidence from New Zealand. Ph. D Dissertation, AUT University.
Bhagat, S. & Black, B. (2000). The non-correlation between board independence and long-term firm performance. Journal of Corporation Law, 27( 2), 231-273.
Matnal, A. (2002). Corporate governance and chairmanship: a personal View Oxford. New York: University Press Inc.
Central Bank of Nigeria (2014). Code of corporate governance for bank in Nigeria post consolidation.
Cheng, S. (2008). Board size and variability of corporate performance. Journal of Financial Economics. 87(2), 157-176.
Claessens, S. & Yurtoglu, B. (2012). Corporate Governance and Development: An Update. Focus 10, global corporate governance network.
Collier, J. C. & Roberts, J. (2001). An ethics for corporate governance. African Journal of Business Ethics, 1(1), 1-7.
Chandler, A. (1962). Strategy and Structure: Chapters in the history of industrial enterprise. New York: Doubleday.
David, F. R. (2005). Strategic management, concepts and cases. New Jersey: Pearson Prentice hall, Inc. 10th Ed.
Dalton, D. R. & C. M. Daily (2002). Meta-analytic reviews of board composition, leadership structure, and financial performance. Strategic Management Journal, 19(2), 269-290.
Dozie, P. (2003). Corporate Governance in Nigeria: A status report on the financial services sector. In O. Alo (Ed.), Issues in Corporate Governance 190 – 200, Lagos: Financial Institution Training Centre.
Drobetz, W., Schillhofer, A. & Zimmermann, H., (2004). Corporate governance and expected stock returns: Evidence from Germany. Working paper, University of Basel.
Eng, L. L., & Y. T. Mak (2003). Corporate governance and voluntary disclosure. Journal of Accounting and Public Policy 22(2), 325-345.
Enofe, A. & Isiavwe, D. (2012). Corporate disclosure and governance in the Nigerian banking sector: An empirical evaluation. The International Journal’s Research Journal of Social Science & Management.
Erhardt, N. L, Werbel, J. D, & Shrader, C. B. (2003) Board of director diversity and firm financial performance. New York: Blackwell Publishing Ltd.
Fama, E. & Jensen, M., (2003). Agency problems and residual claims. Journal of Law and Economics, 26(2), 327-349.
Ferreira, D. (2010). Board Diversity. London School of Economics. Available at: http://personal.lse.ac.uk/FERREIRD/Board%20Diversity%20version%201.pdf.
Goodpaster, K. E. (2004). Ethics or Excellent? Conscience as check on the unbalanced pursuit of organizational goals. Ivey Business Journal, 2(3), 1-3.
Hamilton, D. H. & Kashlak, R. J. (2009). National influence on multinational corporation control system selection. Management International Review, 36(2), 176-189.
Hermalin, B., & M. Weisbach (2008). Endogenously chosen boards of directors and their monitoring the CEO. American Economic Review, 88(4), 96–118.
Ibrahim, Q., Rehman, R. & Raoof A. (2010). Role of Corporate governance in firm performance: A comparative study between chemical and pharmaceutical sector in Pakistan. International Research Journal of Finance and Economics, 50(3), 8-16.
Ibrahim, M., Sulaiman, M., Kahtani, A., Abu-Jarad, I. (2012). The relationship between strategy implementation and performance of manufacturing firms in Indonesia: The role of formality structure as a moderator. World applied science Journal, 20(7):955-964.
Isiavwe, D. (2015). Determinants of corporate disclosure in the banking industry: evidence from Nigeria. (Unpublished Ph.D). thesis written in the department of accounting and submitted to the school of postgraduate studies Igbinedion University, Okada, Edo State, Nigeria.
Iskander, M. R,. & Chamlou, N. (2000). Corporate Governance: A Framework for Implementation. World Bank working paper.
John, K. & Senbet, L. (2008). Corporate governance and board effectiveness. Journal of Banking and Finance, 22(4), 371-403.
Krieger, M. P. (2001). The importance of role of subsidiary board in MNCs: Comparative parent and subsidiary perceptions. Management International Review, 36(3), 317-331.
Lewis, P. S., Goodman, S. H., & Fandt, P. M. (2001). Management, challenges in the 21st century. USA: South Western Publishing.
Long, C. S., Perumal, P. and M. A. Ajagbe (2012a). The Impact of human resource management practices on employees’ turnover intention: A conceptual model. Interdisciplinary Journal of Contemporary Research in Business, 4(2), 629-641.
Long, C. S., Ajagbe, M.A., Khalil, M.N., &. Suleiman,E.S. (2012). The Approaches to Increase Employees’ Loyalty: A Review on employees’ turnover Models. Australian Journal of Basic and Applied Sciences, 6(10): 282-291
Long, C. S., G. R. Mahanra and M. A. Ajagbe (2013). Can employee share option scheme improve firm’s performance? A Malaysian case study. Information Management and Business Review, 5(3), 119-128.
Monks, R. A. G., & Minow, N. (2006) Corporate governance mechanism. New York :Blackwell.
Neubauer, F. F. & Lank, A. G. (2008). The family business: Its governance for sustainability. New York: Routledge.
Nickell, S., Nicolitsas, D. & Dryden, N. (2007). What makes firms perform well? European economic review, 41(2), 783-796.
Nielsen, J. D. (2000). The Role of institutional investors in corporate governance. Dilemma, public lecture, Covenant University, Ota, Ogun State, January 25.
Oyediran, C. O. O. (2003). Achieving transparency in corporate governance: issues, modalities and challenges. In O. Aloa (ed), Issues in Corporate Governance 60-70 Lagos, Financial Institutions Training Centre.
Prowse, S. D. (2008). Problems of external finance and corporate governance Corporate Governance: Emerging Issues and Lessons from East Asia, The World Bank Group, 29(2), 3-14.
Rose, C. (2007). Does female board representation influence firm performance? The Danish evidence. Journal compilation Blackwell Publishing Ltd, 15(2), 404-413.
Rossouw, D. (2005). Corporate governance trust in business: A matter of balance. African Journal of business ethics, 1(2), 2-8.
Roth, K. & O’Donnell, S. (2006). Foreign subsidiary compensation strategy: An agency theory perspective. Academy Journal of Management Journal, 39(3), 678-703.
Sanda, A., Mikailu, A. & Garba T. (2005). Corporate governance mechanisms and firm financial performance in Nigeria. African Economic Research Consortium, Research Paper, 149, Kenya regal press.
Solomon, J., & Solomon, A., (2004). Corporate governance and accountability. London: John Wiley & Sons Ltd.
Solomon, O., Hashim, H. N., Mehdi, B.T.Z. and M. A. Ajagbe (2012). Employee Motivation and Organizational Performance in Multinational Companies: A Study of Matnal Nigeria Plc. International Journal of Research in Management and Technology, 2(3), 303-312.
Walt, N. V., & Ingley, C. (2003). Board dynamics and the influence of professional background, gender and ethnic diversity of directors, corporate governance. An International Review, 11(4), 218-234.
