Corporate Governance and Firm Financial Performance: Do Ownership and Board Size Matter?

Stephen Oluwafemi Adeusi; Niyi Israel Akeke; Foluso Olugbenga Aribaba; Obawale Simeon Adebisi

Authors

Stephen Oluwafemi Adeusi Department of Banking and Finance, Faculty of Management Sciences, Ekiti State University, Ado Ekiti, Ekiti State, Nigeria.
Niyi Israel Akeke Department of Business Administration, Faculty of Management Sciences, Ekiti State University, Ado Ekiti, Ekiti State, Nigeria.
Foluso Olugbenga Aribaba Centre for Distance Learning, Obafemi Awolowo University, Ile-Ife, Nigeria.
Obawale Simeon Adebisi Department of Business Administration, Faculty of Management Sciences Ekiti State University, Ado-Ekiti, Nigeria

Abstract

Using a sample of 10 selected banks annual reports covering 2005-2010, this study examines the relationship between corporate governance and performance in Nigeria banking sector. Based on the econometric model, the result indicates that improved performance of the banking sector is not dependent on increasing the number of executive directors and board composition. It shows further that when there are more external board members, performance of banks tends to be worse. The study concludes a need for increase in board size and decrease in board composition as measured by the ratio of outside directors to the total number of directors in order to increase the bank performance.

DOI: 10.5901/ajis.2013.v2n3p251