Board Structure and Financial Performance of Listed Industrial Goods Companies in Nigeria

Abstract

This paper examined the impact of board structure on financial performance of listed industrial goods firms in Nigeria between the years 2015 and 2024. In particular the research was on the effect of board
size, board independence, and CEO duality, on financial performance, defined as Return on Investment (ROI). The study is motivated by the discrepancy in the previous empirical literature and the fact that little has been done on the industrialmgoods sector in Nigeria. Ex-post facto research design was used and the secondary data were collected in the form of annual report of eight of the selected industrial goods listed companies and the total response of 80 panel was obtained. The panel least squares regression was used to analyze the data by considering the fixed effects in order to take care of firm-specific characteristics. The results showed that the size of the boards exerts a negative and significant influence on financial performance so that increasing the board size can result in decreased efficiency because of coordination and decisionmaking issues. However, the board independence had a positively correlated but statistically irrelevant relationship with financial performance, which
suggests that independent directors can have a beneficial effect on governance, but the effect on performance is less significant. CEO duality, also, had a positive and non-significant impact on financial performance, which suggests that being a CEO and board chairman does not have a significant impact on firm performance. The research finds out that board structure has an impact of being a determinant of firm performance with the board size being most sensitive. It suggests that the companies should have an optimum size of the board to achieve good decision making and financial performance as well as to reinforce the overall practices of corporate governance.