Mountain Top University Library

There has been debates over the years on corporate governance and financial performance. The main objective of this study is to evaluate the Effect of Corporate Governance on the Financial Performance of listed Consumer goods firms in Nigeria. The corporate governance of the selected CG was proxied using board size (BSZ), board gender diversity(BGD), board independence (BID), board financial expertise (BFE) and board activism (BAS),while profitability (ROA and ROE) was proxied for performance. Ex-post facto research design was employed using time series data obtained from various Annual Reports on the Nigeria Stock Exchange (NSE) and audited annual financial report obtained from the individual firm’s website. Out of the total of Twenty eight (28) CGs listed, ten (10) CGs were randomly selected for this study. The study made use secondary data, where all data related released were extracted from corporate financial statements, NSE fact books as well as the relevant companies’ websites. Return on asset (ROA) and return on equity were positively and significantly correlated(r=0.534, p<0.001). Board size is insignificant but positively correlated with ROA (r=0.005,p=0.935, but significantly negatively correlated with ROE (R=-0.432, P=0.017). Board gender diversity has insignificant but positive impact on both ROA and ROE of the CG firms. Board independence has significant positive effect on organization performance, measured by ROA(r=0.364, p<0.001), and similar significant positive effect on ROE (r=0.169, p=0.043). Board financial expertise has an insignificant but positive effect on ROA (r=0.068, p=0.421), but also has insignificant and negative correlation with ROE (r=-0.039, p=0.639). Board activism has an insignificant effect on ROA (r=0.037, p=0.644), but has a significant negative effect on ROE(r=-0.176, p=0.003). Finally, collective effect of element of corporate governance studied was strongly significant for ROA (P>0.001) but insignificant for ROE. This study concludes that, if corporate governance are effectively composed and allow to function independently they will become potent tools to enhance organization performance.