Impact of Corporate Governance on Financial Performance of Financial Holding Companies in Nigeria

Abstract

The paper impact of corporate governance on financial performance of financial Holding Companies in Nigeria.The paper used corporate governance mechanism proxied by board size, board independence, board composition, board meetings and board number of committees on Return on Assets. Data were obtained from three financial holding companies in Nigeria Annual Reports for the period 2012 to 2019. A strongly balanced longitudinal time series data was employed for the analysis, while the Hausman test was conducted for selection of fixed or random effects. The random effect was chosen,and the results indicates that variables of corporate governance such as board size and board Independence have negative relationship with financial performance of Financial Holding Companies (Holdcos) in Nigeria. Board composition and Board Committees had positive nexus with financial performance of financial Holdcos . While board meeting had a negative effect on financial performance of financial Holdcos in Nigeria. Consequent upon the results obtained, the study recommends that the board size should be moderate, board members (executive, non-executive and independence) should be well experience and qualified as well as available to attend to its oversight functions. High frequency of meeting of the board should be restrained from as it may not necessarily engenders increase in financial performance. Also, Holdcos should have more Board Committees to ensure effective oversight as it leads to better financial performance.