IMPACT OF CORPORATE GOVERNANCE MECHANISMS ON THE FINANCIAL PERFORMANCE OF LISTED INSURANCE FIRMS IN NIGERIA

Abstract

This paper studies the impact of Corporate Governance Mechanisms on the financial performance of listed insurance firms in Nigeria. The Paper investigates whether CEO status, board size and board composition have impact on the financial performance as measured by Return on Asset (ROA) and Return on Equity (ROE). The data used in this study were obtained from annual reports and accounts of selected insurance companies and other statistical documents/records maintained by the Nigerian Exchange Group. Regression analysis was used to estimate the relationship between financial performance measures and the corporate governance mechanisms. The study discovered that there is a positive significant relationship between Board Composition and the two firms’ performance measures (ROE & ROA). The study also shows that the relationship between Board size and ROA was significantly negative, while no relationship exists between board size and Return on Equity (ROE). The result of the relationship between CEO status and ROA was negative while no relationship exists between CEO status and ROE. The study recommends that the code on board composition of listed insurance companies should be sustained and encouraged so that corporate governance could be strengthened to allow room for enhanced financial performance of the listed insurance companies in Nigeria.