CHAPTER ONEs

INTRODUCTION

1.1. Background To The Study.

Corporate governance is typically linked with private sector organizations. The

owners of the company, the shareholders, employ managers as their agents to manage the

business and take strategic and operational decisions in the interest of the firm and

shareholders. Because the agents and owners are separate individuals and groups, the

relationship between them often bring conflicts of interest. Whereas the managers are

employed to maximize returns to shareholders and also look after the interests of all other

stakeholders, they often pursue self-interest to the detriment of the financial interest of

their principals (Haji, 2014; Smith, 2019). By using insider knowledge, managers of

corporations could hide and use price-sensitive information to benefit themselves

(Appuhami & Bhuyan, 2017; Liu, Valenti, & Chen, 2018).

Abdulrahman (2018) said that the prevailing economic and corporate financial scandals

that occurred in previous years had necessitated critical studies on African economic

position with the experience of the various organization such as Worldcom, Enron Tyco,

and Parmalat ,that were characterized by different financial irregularities which resulted

in substantial loss to different stakeholders. It was also noticed that the effectiveness of

corporate governance depended on the ways applied for the benefit of different

stakeholders.
This failure has frequently been linked to flaws in operating environments and internal

control systems, as well as a lack of commitment to upholding high ethical standards.

Sometimes organizational designers and controllers willfully or purposefully create these

shortcomings, and Other times, the collapse be the outcome of the naive belief that

persons in charge of managing tasks are capable of doing so and will always operate in a

way that implies or encourages enlightened self-interest, which should eventually have

the goal of advantages for all parties involved (Donaldson & Preston, 1995).

The collapse and scandal of many large corporations led to the introduction of the

Sarbanes-Oxley Act, which demonstrated the need to advance corporate governance

standards. The objective of Sarbanes-Oxley is to protect present and potential investors

and creditors of corporations by regulating the content, accuracy, and reliability of

corporate disclosures in the financial statements (Dah, 2016). One of the most profound

changes brought by the SOX is the establishment of the Public Companies Accounting

Oversight. Board (PCAOB). The PCAOB has the mandate to (a) register all public

accounting firms that audit public companies; (b) establish auditing, quality control,

ethical, and independence attestation standards required of external auditors; (c)

periodically assess the degree to which audit firms comply with the rules of the PCAOB

and professional standards; and (d) establish procedures for investigating and

disciplining registered firms and persons associated with them (Sarbanes-Oxley, 2002).

The SOX (2002) also requires public companies to ensure independent directors are in a

majority on the boards of directors and to have audit committees composed entirely of
independent directors. These provisions should ensure that governance mechanisms have

the potential to reduce agency problems and enable the firms to function effectively

(Baran & Forst, 2015).

While a private sector corporation the topic of governance is frequently discussed and

studied, but we also need to pay attention to the public enterprise governance in the

sector. The concept of governance in business organizations is neither new to the world

of business nor is new to economic literature but has attracted greater attention since the

early 1990s due to the increasing wave of globalization, requirements for increased

financial reporting, and rising episodes of corporate failures.

Nigeria’s Public Enterprises are generally corporate entities other than ministerial

departments; they derive their existence from special statutory instruments and engage in

business type of activities to provide goods and services for the cultural, social, and

economic upliftment of the citizen. These include corporations, authorities, In the public

sector, corporate governance is described as machinery set up in corporations or

organizations to manage and control their activities in such a way as to ensure that they

fulfil the purposes for which they were established (Badejo-Okusanya, 2011).

The World Bank (1997) noted that bad governance has many features, among which are

failure to make a clear separation between what is public and what is private, hence a

tendency to divert public resources for private gain, failure to establish a predictable

framework for law and government behavior that is conducive to development or

arbitrariness rules, regulations, licensing requirements among others which impede the
functioning of markets and encouragement of rent seeking; priorities that are inconsistent

with development, thus resulting in misallocation of resources.

Onah (2006) contends that government intervention in business in any capitalist

economy is to maintain the principle of price competition by promoting entry of

enterprises into the industry. This will eliminate cheating, fraud, monopoly and

discrimination. In the case of the mixed economy, government involvement is based on

the idea that most of the essential services the individuals need are costly that left for

them, these individuals could not produce and provide them. Also, it aims at avoiding

unnecessary proliferation of some of these essentials services such as water, electricity

supply, and indiscriminate construction of roads and airports. It also tries to maintain a

fair distribution of social services by collecting from the rich and giving to the poor

through taxation, grants and subsides. The advocates of government participation base

their arguments that some goods that are regarded as public goods such as water supply,

electricity supply, and roads should not be left in the hands of the individuals alone but

should be taken care by the government. This gives rise to a welfare state ideology of the

government and the more a state is able to provide to every one of it’s citizens. The

minimum guarantee for material welfare such as medicare, education, housing among

others. State welfare is based on the idea that each individual is a human being and as

such is entitled to a fair share of welfare, his lack of possession of the resources to

support and secure it notwithstanding. In Nigeria, the need for corporate governance

came to the fore in the wake of the financial crisis of the early 1990s. Poor corporate
governance was identified as one of the major factors in almost all the known instances

of distress in the financial sector in Nigeria (Ofo, 2013). The onus of corporate

governance discussion is based on the premise that by adopting sound corporate

governance practices, business entities will record superior performance and

competiveness (Denis andMcConnell, 2003).

Furthermore, there has been renewed interest in the corporate governance practices of

public corporations as it is suspected that countries with strong corporate governance

practices attract capital inflow. In addition, domestic and international investors are more

likely to shy away from countries that neither guarantee investor rights, nor provide

adequate corporate disclosures to ensure sound board practices (Osaze, 2007; Klynveld,

Peat, Marwick and Goerdeler (KPMG) Report, 2010; Ilori, 2012).

These enterprises' (Nigerian Airways Ltd., Nigerian Railway Corporation, Nigerian Coal

Corporation, Ajaokuta Steel Complex, etc.) mismanagement by both foreign and

domestic managers is documented, extending and broadening the corporate profiles.

Failures and deficient performance metrics. Poor performance is described by Adebayo

( 2000: 3-4). Despite having substantial annual budgets, municipal utilities are "as lifeless

as telephones for several days," electricity that fluctuates and is uncertain throughout

months and years, inconsistent postal services and unreliable, with water taps that, no

matter how you crank them, will not drip." They include the due to the country's high

levels of inefficiency, corruption, squalor, poverty public infrastructure, and utilities

failing to deliver the desired goods and services how much. Even when managed by
public officers or foreign consultants, the scorecards of the majority of publicly traded

enterprises consistently display poor financial and physical performance. the selection of

unproven local and international consultants’ Records or a lineage of exceptional

achievement caused more harm than good. The Loss of invested funds, associated

advantages, and expectations as a result Stakeholders at the altar of management failure

and ineptitude. These oddities are most likely brought on by reactive corporate

governance procedures. Moreover, the lack of limited the authority and scope of control

and the freedom of the organized interface. Management's performance in carrying out

commercial duties could be a significant element.The final result is that excellent

corporate governance continues to lose its advantages and potential.

In spite of the fact that the Nigerian Public Enterprises were created mainly for the

purpose of expediting and facilitating economic development, the Nigerian Public

Enterprises have been and continued to be criticized for her lack of productivity,

efficiency, and transparency. This ill-nature of the Nigerian Public Enterprises is well

captured by the Nigerian Bureau of Public Enterprises: “There is virtually no public

enterprise in Nigeria today that functions well. While they were created to alleviate the

short-time of the private sector and spearhead the development of Nigeria, many of them

have stifled entrepreneurial development and fostered economic stagnation. NITEL,

NEPA, and the Nigeria National Petroleum Corporation (NNPC) is the best examples of

these. Public enterprises have serrated as platforms for patronage and the promotion of
political objectives, consequently suffer from operational interference by civil servants

and political appointees which leads to corporate failure. (Parson, (2012) in Nellis, 2013).

1.2. Statements Of The Problem

The imperative for sound corporate governance was, at early stages, underscored by the

need to safeguard shareholders’ interest, but over time, the scope was extended to include

protection of other important interests in business organizations (Jizi, Salama, Dixon, &

Startling, 2014). The shift to stakeholder emphasis derives from the argument that these

other interests are equally threatened when business organizations are poorly managed.

The significance of sound governance practices to business performance is well

established in the literature. For instance, Kolk and Pinske (2010) posit that strong

corporate governance structures boost stakeholder confidence, strongly indicating

management commitment to the efficient and responsible management of business

organizations. Good corporate governance also minimizes exposure to risk for investors

and promotes firm performance (Spanos, 2005).

Studies by Bae and Goyal (2010), Monda and Georgino (2013), P. Dua and S. Dua

(2015), I. Yang, Yan, Li, and H. Yang (2012), and Botosan (2006) show that enhanced

stock performance correlates strongly with improvements in corporate governance

practices.
Ojeka, Iyoha, Ikpefan, and Osakwe (2017) estimated the relationship between

governance and stock market behavior in Nigeria and discover the robust positive effect

of independent audit committee, financial expertise of audit committee, and board

independence on stock price, volume traded, earnings per share, and market

capitalization.

The work of Uwuigbe (2011) presents a negative correlation between bank profitability

and board size, while directors’ interest and degree of corporate disclosure correlate

positively with financial performance. It further shows a marked difference between

healthy banks’ performance and rescued banks but did not substantiate that the

performance of banks whose boards are comation between board size and business

reputation but shows that board size correlates negatively with financial performance.

However, studies by Belkhir (2009) and Ene and Bello (2016) discover the significant

positive effect of board size on bank performance. Besides, Ene and Bello (2016) report

that the number of non-executive directors positively correlates with financial

performance .

Therefore, in light of the aforementioned statements, this study is conducted to know

whether a different result will be obtained compared to previous researches on corporate

governance but using selected public enterprises as a case study in Nigeria. This indicates

that it is deemed necessary to specifically examine the the impact of corporate

governance on the performance of selected public enterprises in Nigeria.

1.3. Objective Of The Study.

 The broad objective of this study is to examine the corporate governance and financial

performance of selected public enterprises in Nigeria. The specific objectives are to:

1. Examine the relationship between corporate governance and financial performance

in the public enterprises.

2. Assess the impact of corporate governance on the profitability in the government

parastatals.

3. Determine the impact corporate governance mechanism on productivity and

accountability in government parastatals.

1.4 Research Question.

1. what is the relationship between corporate governance and financial performance in

public enterprises?

2.Does corporate governance impact the profitability in the government parastatals?

3.How does corporate governance mechanism impact the productivity and accountability

in government parastatals.

1.5 Research Hypotheses

Hypothesis one
Ho There is no significant relationship between corporate governance and financial

performance in the public enterprises .

H1: There is significant relationship between corporate governance and financial

performance in the public enterprises .

Hypothesis Two:

Ho: There is no significant relationship between impact of corporate governance and

profitability in government parastatals.

H1: There is significant relationship between impact of corporate governance and

profitability in government parastatals.

Hypothesis Three:

Ho: There is no significant relationship between impact of corporate governance

mechanism on productivity and accountability in government parastatals.

H1: There is significant relationship between impact of corporate governance mechanism

on productivity and accountability in government parastatals.

1.6 Significance Of The Study.

Several studies have been conducted on corporate governance and the performance of

organizations either collectively or individually on different research topics in different

years.

This study appears to be the first, to the best of the researcher’s knowledge, to consider

corporate governance and the performance of public enterprises in Nigeria. Thus, the

study will fill an important void currently existing in the literature in respect of corporate

governance practices in the Public enterprises in Nigeria. Some similar research topics

are: Impact of Corporate Governance on the Performance of Selected Banks in Nigeria

(2021), Reforming public enterprises in Nigeria. through good governance (2019), The

impact of corporate governance in financial reporting quality( 2022),Corporate

governance and fraud management of quoted commercial banks in

Nigeria(2022),Corporate governance and performance of quoted deposit money banks in

Nigeria using balanced scorecard approach(2021),Corporate governance accountability

and costof equity capital: evidence from Nigeria quoted companies(march

2022),Corporate governance and integrated reporting: evidence from selected listed

companies in Nigeria(2021), Corporate governance and corporate social responsibility:

moderating roles of firm size in Nigeria(2020),Corporate governance and cash holding in

Nigerian listed companies(mar. 2021), Effects of corporate governance on financial

performance of commercial banks in Nigeria (march 2021), Corporate governance and

firm’s financial performance amongst private business enterprises in uganda, perspefrom

slira city( september, 2021).

The results of this study, however, are not intended to refute previously published related

research works; rather, they are intended to be of significant importance to Nigerian

public enterprises by bolstering their arguments and corroborated previously published

literature on corporate governance in Nigeria, which will be used as a guide for future

research.

The findings of this study will help the management, Board of Directors, shareholders,

government and other stakeholders whether or not corporate governance has impact in

determining the financial performance of public enterprises in Nigeria. The researcher

intend to measure and analyse the trend in the corporate governance of public enterprises

in Nigerian in relation to their performance.

1.7 Scope Of The Study.

The scope of the study shall assess corporate governance and finanacial performance

in the public sector using three local government area as a case study.( Ojo, Alimosho

and Badagry). The study is also to examine accountability in public sectors and

corporate governance aids to it. In order to conduct an empirical investigation into

examining corporate governance and financial performance in public sectors, the

study will be limited to three Local Government Area of Lagos State.

1.8 Definition Of Terms.

 Corporate governance: This involves a set of relationships between a company’s

management, its board, its shareholders and other stakeholders.

 public enterprise : a business organization wholly or partly owned by the state and

controlled through a public authority.

 Shareholder:  shareholder is any person, company, or institution that owns shares in a

company's stock. A company shareholder can hold as little as one share. Shareholders

are subject to capital gains (or losses) and/or dividend payments as residual claimants

on a firm's profits.

 Government:  government is the system to govern a state or community.

 Sarbanes-Oxley: The Sarbanes-Oxley Act of 2002 is a federal law that established

sweeping auditing and financial regulations for public companies. 

 Board of directors:  board of directors (B of D) is the governing body of a company,

elected by shareholders in the case of public companies to set strategy and oversee

management. 

 Performance: the action or process of performing a task or function.

Conflict of interest: a situation in which the concerns or aims of two different parties

are incompatible.

 Accountability: According to Dan Oku {2001}” as setting correct goals, evaluating

the effective achievement of the major objective and at what price, presenting and

interpreting this information to the public and accepting responsibility of failure.

 CHAPTER 2

LITERATURE REVIEW

2.1 INTRODUCTION

This chapter is simply a review of the main concepts used in this study and gives a

breakdown of theories and findings relating to this study that has been pushed forward for

debates and discussion (i.e propounded) by notable scholars. It also gives an overview of

the Nigerian public enterprises as well as past empirical findings on the subject matter. It

is classified into three basic sections, namely; conceptual review, theoretical review and

empirical review of literature.

2.2.1 CONCEPTUAL REVIEW

In this section, the concept of corporate governance, corporate governance attributes and

financial performance are enormously discussed and presented.

2.2.2 CORPORATE GOVERNANCE

Researchers, authors and some scholars view corporate governance from different

perspective. Some notable organizations also contributed to the development and

definitions of corporate governance.

The first author who manifested interest in researching the causes of the financial failures

and who conceptualized CG was Adrian Cadbury, who, in 1992, as president of the

Committee for Corporate Governance Financial Aspects in Great Britain, developed and

published the Cadbury Code.

The Cadbury Report defined Corporate governance as “the system by which companies

are managed and controlled”

Mayowa,Olusola and Olaiya (2021) defined corporate governance as “the structure by

which an entity is controlled and directed. It is concerned with the function of a

company’s strategic level to successfully head the company and their consensus with its

equity holders and other external and internal stakeholders .Corporate governance

mechanism is a set of processes, customs, policies, laws and intuitions affecting the way

a corporation is directed, administered and controlled. Corporate Governance is a

stringed leaflet that aid to coordinate the business process and system of a corporate

organization, set up by the owners and managers. Corporate governance must entail the

attribute of satisfying the interest of all internal and external stakeholders and

shareholders in the affairs of a firm all around the globe (Mayowa, Olusola & Olaiya,

2021).

Corporate governance mechanisms is a system of structuring, operating, and controlling

the activities of a company with a view to achieving long-term strategic goals of

satisfying its shareholders, creditors, employees, customers and suppliers (Manukaji,

2020).
Corporate governance is a mechanism through which management takes necessary steps

to safeguard the interest of stakeholders. It is also the framework within which rules,

relationships, systems and processes are controlled (Osundina, Olayinka & Chukwuma,

2016).Corporate governance is defined as the systems and the bedrock on which the

direction and controlling of an entity stand (Hunpegan 2022) .

2.2.3 CORPORATE GOVERNANCE IN NIGERIA

The drive towards sound governance practices among Nigerian firms commenced

approximately three decades ago with the enactment, in 1990, of the Companies and

Allied Matters Act (CAMA). However, CAMA was criticized for its weak enforcement

mechanism, as corporate infractions persist. This challenge contributed to unprecedented

corporate failures, notably in the banking sector (Nworji et al., 2011). These concerns,

coupled with global developments, heightened calls for a dedicated corporate governance

regulation.

In response, corporate governance regulation in Nigeria took off in 2003 with the SEC

Code of Corporate Governance. The SEC Code (2003) primarily recognizes directors and

shareholders’ roles in establishing corporate governance systems. The code also

addresses critical governance areas such as the roles of non-executive directors and the

features (i.e. the composition and qualifications) of audit committees. Nakpodia et al.

(2018) explain that adopting corporate governance guidelines intended for western and

less “corrupt” countries poses significant challenges during implementation. These

concerns prompted subsequent revisions of the code in 2011 and 2018. The 2018 code,

renamed the Nigerian Code of Corporate Governance (NCCG), unveiled a novel

regulatory model. It introduced the “apply and explain” principle to replace the “comply

or explain” model. The “apply and explain” principle requires the application of all

principles and obliges entities to explain how the principles are applied. NCCG (2018)

also responded to calls for a code that recognises sectoral differences. It is crucial to note

that there are industry-specific corporate governance codes in addition to NCCG (2018).

These include the Central Bank of Nigeria’s Code of Corporate Governance (2006), the

National Pension Commission’s Code of Corporate Governance for Pension Operators

(2008) and the National Insurance Commission’s Code of Corporate Governance (2009).

While these regulations have increased governance consciousness among stakeholders,

multiple challenges continue to plague Nigeria’s corporate governance (Osemeke and

Osemeke, 2017; Nakpodia et al., 2021).

These challenges can be classed into three categories – regulatory, business environment

and normative. The regulatory problems highlight concerns triggered by the existing

regulatory frameworks. These include ineffective regulatory structure (Adegbite, 2012;

Nakpodia et al., 2021), weak protection of minority shareholder rights (Areneke and

Kimani, 2019) and multiple regulations (Bello, 2016; Nakpodia et al., 2018). Nakpodia

et al. (2020b) show that the high religiosity among Nigerians has not ignited the desired

corporate governance, as stakeholders engage in a rational ordering over religious

principles. Another normative challenge is the inefficient deployment of social capital

(e.g. religion, ethnicity, culture) networks and relationships (Booth-Bell, 2018). Instead,

social capital is used in ways that frustrate corporate governance (Osemeke and
Osemeke, 2017; Nakpodia et al., 2021). Adekoya (2011) adds that the falling standard of

education intensifies normative concerns.

While scholars (Green and Homroy, 2018; Arslan and Alqatan, 2020) show that

directors’ educational qualification impacts firm performance, Adegbite et al. (2013)

explain that corporate governance understanding in Nigeria is in flux, pulled in multiple

directions by stakeholders. As the preceding suggests, reform (in)effectiveness derives

from practitioner application, especially corporate executives. Given its institutional

environment, executives in the country engage their external resources (social capital) to

influence reform outcomes. Therefore, it is critical to understand how external resources

affect executive attitude relative to governance reforms.

2.2.4 CORPORATE GOVERNANCE PRINCIPLES

The 1992 Cadbury Report set 3 foundational principles that companies listed in the stock

exchange have to observe: openness, integrity and accountability.

The 3 principle set by the Cadbury Report (paragraphs 3.1-3.2) are explained as follows:

1. Openness of the companies, in the limits set by their competitive position, is the

foundational element for the level of trust which needs to exist between the business and

all those who have an interest in its success. An open approach towards information

dissemination contributes to the efficient functioning of market 498 economy,

determining the Boards of directors to take more efficient measures and allowing

shareholders and other stakeholders to better check their companies

2. Integrity – it means both direct practice and completeness. What is required of

financial reporting is that it should be honest and that it should present a balanced picture

of the state of the company’s affairs. The integrity of reports depends on the integrity of

those who prepare and present them.

3. Accountability – The Boards of directors are accountable to their shareholders and

both have to play their part in making that accountability effective. Boards of directors

need to do so through the quality of the information which they provide to shareholders,

and shareholders through their willingness to exercise their responsibilities as owners.

Starting from the principles set by the Cadbury Report, which represented the starting

point in the field of CG laws and principles and from other CG codes elaborated

afterwards (e.g. Rutterman Report, Greenbury Report, Hampel Report, the Combined

Report), which supported and completed the Cadbury Report, in 1999, the OECD

developed the key principles of corporate governance, which set the foundation of CG

functioning and which are

(OECD, 1999):

1. Ensuring an adequate framework for the effective implementation of sound corporate

leadership – the Corporate governance framework should promote transparency and

efficiency of markets, agreement with rules and laws, as well as segregation of

responsibilities of different management, regulations and authorities;

2. The Shareholders’ rights and key aspects related to ownership rights – the framework

of Corporate governance should protect and facilitates the shareholders’ rights;

3. Equal treatment of all shareholders – the CG framework should ensure equal treatment

of all shareholders, including minorities and foreign shareholders. All shareholders

should have the opportunity to get actual compensation if their rights are disrespected;

4. The stakeholders’ role in corporate governance – the CG framework should

acknowledge the rights of stakeholders set by law or by other approved commitments and

should encourage cooperation between organizations and stakeholders for value and job

creation and for supporting financially sound enterprises;

5. Information and transparency – the CG framework should ensure a credible and

prompt information issuance / transmittal, referring to all material issues involving the

corporation, including financial situation, performance, ownership and management of

the company

6. The Board of Directors responsibilities – the framework for CG should ensure the

strategic guidance of the company, effective monitoring of the management by the Board

of directors, as well as the accountability of the Board in front of shareholders and the

company. Ani Matei and Ciprian Drumasu / Procedia Economics and Finance 26 ( 2015

) 495 – 504

2.2.5 The Principles of Corporate Governance in public sector

In May 1995, the Nolan Commission set seven key principles of public life addressed to

the members of public central organizations (members of Parliament and ministries, as

well as public servants), known as „the Nolan principles”: (The Chartered Institute for

Public Finance and Accounting CIPFA, 1995)

Selflessness - Holders of public office should take decisions solely in terms of the public

interest. They should not do so in order to gain financial or other material benefits for

themselves, their family, or their friends.

Integrity – Holders of public office should not place themselves under any financial or

other obligation to outside individuals or organisations that might influence them in the

performance of their official duties.

Objectivity - In carrying out public business, including making public appointments,

awarding contracts, or recommending individuals for rewards and benefits, holders of

public office should make choices on merit.

Accountability – Holders of public office are accountable for their decisions and actions

to the public and must submit themselves to whatever scrutiny is appropriate to their

Sincerity: Sincerity means the absence of pretence, deceit or hypocrisy. It goes

beyond honesty, requiring earnestness in all you say and feel. It is when there is

perfect alignment between one’s thoughts, feelings, words and actions.

Openness – Holders of public office should be as open as possible about all the decisions

and actions that they take. They should give reasons for their decisions and actions and

restrict information only when the wider public interest clearly demands.

Honesty - Holders of public office have a duty to declare any private interests relating to

their public duties and to take steps to resolve any conflicts arising in a way that protects

the public interest.

Leadership – Holders of public office should promote and support these principles by

leadership and example. Two years later, the Committee for Public Life Standards

expanded the seven principles of public life towards the staff involved / employed in the

local public administration.

2.2.6 Characteristics Of The Corporate Governance Of Public Entities

Considering the particularities of the public sector, respectively public entities not being

listed in the stock exchange and not being owned by investors / shareholders, as well as

the fact that they are not exclusively oriented towards profits, the characteristics of

private companies’ corporate governance do not entirely reflect within the corporate

governance of public entities.

In the context of the critique brought to the Cadbury Code (which was criticized in the

specialized literature because it referred solely to the private sector, and not to the public

sector), starting from the three fundamental principles of corporate governance identified

by the Cadbury Report, in July 1995, the Chartered Institute for Public Finance and

Accounting (CIPFA) developed the first corporate governance framework for the public

sector, containing a common set of principles and standards for management and control

of public organizations.

The corporate governance framework for the public sector, developed by the Chartered

Institute for Public Finance and Accounting (CIPFA) approaches 3 key areas:

The first key area – organizational processes and structures – refers several aspects

regarding:

o Responsibility towards the law;

o Responsibility for public money;

o Communication with stakeholders;

o Roles and responsibilities for:

 Balance between power and authority

 Council

 President

 Non-executive members of the Board of directors

 Executive management.

o The second area of the corporate governance framework – controls and financial

reporting – consists of the following components:

o Annual reporting,

o Internal controls:

 Risk management

 Internal audit

o Audit committees,

o External audits.

o The last area of the corporate governance framework – behavioural standards of

directors –refers to:

o Leadership / management

o Behavioural codes
  Selflessness, Objectivity and Honesty

2.2.7 Financial performance

There are many different ways to measure financial performance, but all measures

should be taken in aggregation. Line items such as revenues from operations,

operating income, or cash flow from operations can be used, as well as total unit

sales. Bank performance refers to how well a bank is doing, especially its

profitability index and income statement. To understand how well a bank is doing,

we need to start by looking at a bank's income statement, describing the sources of

income and expenses that affect the bank's profitability. The bank's profitability can

also be seen as a measure of its return on asset (ROA) (Emeka and Bello, 2016)

2.2.8 The Concept Of Profitability

Profitability results from effective management processes and is the critical metric for

evaluating success in business management or business management which are in

many forms. It can be measured using quantitative and qualitative data reflecting the

Company's actual economic value and performance as the database that helps

management make investment decisions. It can be concluded that profitability is

something that organizations use as a tool to measure operational efficiency (Basdekis,

Christopoulos, Katsampoxakis, & Lyras, 2020; Halimatusadiah, Sofianty, & Ermaya,

2015; Imhanzenobe, 2019; Pestanyi & Donkwa, 2018; Sinha & Sharma, 2016;

Thunputtadom et al., 2018; Wattanakanjana, 2016) which includes gross profit ratio,

Return on Assets, net profit ratio, Return on Equity, and earnings per share ratio.
2.2.9 Responsibility of Governing Bodies

Development is determined by how well the governing bodies delivers their

responsibilities relative to its goals. Sreeti (2017) states that corporate governance is the

process through which corporate resources are allocated in a manner that maximises

value for stakeholders such as shareholders, investors, employees, customers, suppliers,

the environment and the community at large. Governing bodies provides goods and

services to the citizens such as good roads, security, health, education, water, protection

of properties and environment, contract enforcement, protection of citizens, paid wages

and salaries of workers, create and implement norms. The voice of the minorities and

most vulnerable in the communities are taken into consideration in decision-making.

Governing bodies delivers these goals to the best interest of the people living in the

communities. They carry out responsibility for the interest of the citizens, rather than

their self-interest which entails economic growth. The elected bodies and appointed

officers ensure that corruption is minimise to the barest minimum to delivering of their

various duties if good governance must come to play

2.2.10 The Corporate Governance Mechanism in Nigeria

In Nigeria, a number of organisations and individuals are responsible for ensuring

effective accountability of public corporations. These are some of them:

The Government

The government plays an important role in corporate governance by enacting numerous

regulations that affect the administration and control of businesses in Nigeria, regardless
of their size. The Companies and Allied Matters Act (CAMA) 2020 is the primary legal

foundation for corporate governance.

The following are some significant elements of the Act that pertain to corporate

governance:

Chapter 11 and 12 - Directors and Secretaries of the company

The board of directors provides oversight function over an organization. Section 271 (1)

of CAMA45 requires that to submit a director's report, which includes information about

the company's whole operations as well as any important developments that occurred

during the year.

The Financial Reporting Council (FRC)

The Federal Government passed the Financial Reporting Act in response to the

heightened focus on good corporate governance and accountability in Nigeria, as well as

the necessity for effective systems for formulating and monitoring corporate governance

standards and guidelines.51 The Financial Reporting Council (FRC) was

founded as a government parastatal, reporting to the Federal Ministry of Industry, Trade,

and Investment. The FRC is responsible for defining and enforcing compliance with

codes of corporate governance, in addition to developing and publishing accounting and

financial reporting standards to be followed in the production of financial statements by

publicly traded firms.

The Council's principal objectives, according to section 11 of the FRC Act, are to:

a) a) Safeguard the interests of investors and other stakeholders

b) b) Provide professional, institutional, and regulatory authorities in Nigeria with advice

on financial reporting and corporate governance issues.

c) Ensure effective corporate governance standards in the Nigerian economy's public and

private sectors.

d) Ensure the accuracy and dependability of financial reporting and corporate disclosures

in accordance with current laws and regulations;

e) Ensure that the activities of relevant professional and regulatory organisations in the

areas of corporate governance and financial reporting are coordinated.

Additional objects includes:

f) Educating auditors and other professionals involved in the financial reporting process

to the highest possible standards.

g) Improving financial reporting's trust worthiness and

h) Improving the quality of accounting and auditing services, as well as actuarial,

valuation, and corporate governance practices.

The following are the operating arms of the FRC:

Directorate of Accounting Standards – Private Sector

Directorate of Accounting Standards – Public Sector

Directorate of Auditing Practice Standards

Directorate of Actuarial Standards

Directorate of Valuation Standards

Directorate of Inspection and Monitoring

Directorate of Corporate Governance

The FRC ensures high-quality financial reporting and effective supervision of firms,

external auditors, and other professionals whose work has an impact on financial

reporting integrity and corporate governance of entities through these distinct arms. Since

its inception, the FRC has released and revised corporate governance codes for publicly

traded firms (which will be discussed later), the most recent of which is the exposure

draft on the Nigerian Code of Corporate Governance 2018. Conformity with accounting

and auditing standards, as well as compliance with the code of corporate governance, has

been continuously monitored by the inspection and monitoring unit.

The Corporate Affairs Commission (CAC)

The Companies and Allied Matters Act (CAMA) 2020 (section 1) established the

Corporate Affairs Commission (CAC) as an independent authority to oversee the

regulation and supervision of company formation, incorporation, registration,

management, and winding up. The Companies Registry was replaced by the CAC after it

was determined to be woefully inadequate in carrying out its duties. It was a department

of the Federal Ministry of Commerce and Tourism that was in charge of registering and

administering the Companies Act of 1968, which has since been repealed. Within 42 days

of the annual general meeting, all corporations must submit audited financial accounts to

the CAC. Small businesses can provide the CAC revised financial statements and balance

sheets. The CAC's Registrar of Corporations keeps track of whether companies and their

officers are complying with the Act's obligations, and imposes penalties for non-

compliance, which are dated. The CAC is also tasked with 'arranging or conducting an
investigation into the operations of any corporation if the interests of the shareholders and

the public so demand' in section 8 (c). Through its Wide Area Network System, the

Commission may offer information on any corporation on demand. The public's access to

information boosts corporate confidence and protects consumers, creditors, and

shareholders individually all registered companies have at least two directors. The

directors are re-appointed at the annual general meeting of the company (section 273)46.

Members of the corporation can dismiss a director before his term expires by passing an

ordinary resolution. While the Act (section 293(1)) stipulates that the company's annual

general meeting determines the directors' salary, this responsibility is currently delegated

to remuneration committees, as stated in the Code of Corporate Governance.

Duties of Directors

The primary role of the board of directors is to guarantee that the organization is run in

the best interests of its stakeholders. They give the business with entrepreneurial insight

and ethical leadership, as well as solutions for the efficient administration of the people,

material, and financial resources entrusted to them. 'A director of a company stands in a

fiduciary directors relationship with the company and shall observe the highest good faith

towards the company in any transaction with it or on its behalf,' according to Section

305(1) of the CAMA. 47 A director is required to 'act at all times' in the best interests of

the company as a whole, in order to preserve its assets, further its business, and promote

the purposes for which it was formed, and in the manner that a faithful, diligent, careful,

and ordinary skilful director would act in the circumstances, according to section 305(3)

Financial Statements and Audit

The shareholders who appoint directors hold them accountable. The annual report serves

as a tool for directors to demonstrate their accountability to shareholders. 'Every firm

shall cause accounting records to be kept...,' according to section 374 (1) of CAMA, 49

and 'the accounting records shall be sufficient to illustrate and explain the company's

operations' (2).50 The directors are responsible for preparing the company's financial

accounts under Section 377. They have a fiduciary responsibility to generate financial

statements that reflect the company's financial operations in an honest and fair manner.

The financial accounts must be approved by the shareholders at least 21 days before the

company's Annual General Meeting (AGM).

The Society for Corporate Governance (SCG)

The Society for Corporate Governance in Nigeria is a non-profit organization dedicated

to promoting corporate governance norms in Nigeria and other emerging markets. The

organization's mission is to promote corporate governance principles both locally and

globally. They are in charge of conducting seminars, trainings, and workshops with the

goal of offering corporate governance education. They do corporate governance

research, which has resulted in publications such as the Bi-annual Journal of Corporate

Governance. The following programs are offered by the Society for Corporate

Governance:

Being an Effective Member of an Audit Committee

Strategic Corporate Social Responsibility

Company Secretaries and Board Effectiveness

Board Enhancement Programmes

Board Evaluation

Leading an Effective Board

Annual Conference on Corporate Governance

Board Strategy Session

The Institute for Corporate Governance in Nigeria (ICGN)

The Institute of Corporate Governance in Nigeria (ICGN) is a professional organization

founded by a group of specialists from various professions with the goal of promoting

excellent corporate governance practices and business ethical standards in Nigeria,

Africa, and around the world. The Institute was founded under the Federal

Republic of Nigeria's Companies and Allied Matters Act, CAP 59 of 1990, with the

approval of the Federal is frequently a legal obligation for them to lend credibility to

management-prepared financial statements. Section 404 (1) of the CAMA 2020 in

Nigeria requires auditors to ‘provide a report... on the accounts examined by them...’

and express their opinion on 1) whether the company whose accounts are being examined

has kept proper books of account. 2) if the auditor's accounts present a truthful and fair

picture of the firm's financial situation; and 3) whether the company has met the statutory

and other disclosure obligations set forth in CAMA 2020. However, the most important

legal requirement is that the profit and loss account and balance sheet present a true and

fair picture of the company's results and state of affairs. As a result, the audit function is
part of the process for boosting confidence in corporate annual reports by conducting an

independent inspection of the company's books and records. Due to the onerous

professional, legal, and social responsibilities of statutory auditors, they must have

the necessary training and experience, and they are also ethically compelled to conduct

their audits in line with established processes and standards.57

Audit Committees

While it is true that Nigeria absorbed the laws and corporate practices of the United

Kingdom as a former colony, a reform of the Companies Act in 1990 gave Nigeria the

opportunity to integrate into law corporate governance standards that were tailored to the

country's needs. The requirement of Section 359(3) of CAMA 1990, now Section 404 of

CAMA 2020, that public company auditors provide a report to an audit committee, which

must be created by all public firms, was one of these unusual measures. The audit

committee is responsible for reviewing the auditors' report and making any suggestions to

the annual general meeting that it deems appropriate. This requirement existed prior to

the establishment of the Cadbury Committee in 1991. In response to the Treadway

Report on False Financial Reporting in 1987, the Securities and Exchange Commission

(SEC) mandated that all SEC-regulated corporations establish an audit committee as part

of the listing requirement beginning in 1988.

In recent years, there has been a surge in interest in the usage of audit committees, and it

is now widely acknowledged as good business practice in many countries, with the

primary goal of improving corporate governance. Effective audit committees give

shareholders confidence that the auditors acting on their behalf are qualified to do so and

will protect their interests. The Cadbury Report of 1992 in the United Kingdom suggested

that all publicly traded firms form audit committees. However, prior to this proposal,

research showed that in 1991, 53% of the UK's top 250 publicly traded corporations had

functional audit committees. However, following the Cadbury Committee's suggestion,

the ratio had climbed to 85% of the larger and 83 percent of the smaller public

businesses.59 The audit committee must be made up of an equal number of directors and

shareholders' representatives, according to Section 359(4) of the CAMA 1990. (Subject

to a maximum of six members). The statute gave statutory recognition to the body of

Nigerian shareholders through the provisions of this section. The provisions of CAMA

1990, now 2020, concerning having an audit committee, all of whose members should be

financially competent, are reiterated in paragraph 6.4 of the draft Code of Corporate

Governance.

The Nigerian Stock Exchange (Now Nigeria Exchange Group)

The Nigerian Stock Exchange (NSE) is a limited-by-guarantee business that is governed

by the Investments and Securities Acts of 2007. The Nigerian Stock Exchange Act of

1961 established the NSE, which is self-regulating and plays a critical role in capital

mobilization. The regulations of the Stock Exchange set forth the requirements

for trading and admission of securities on the Exchange's floor. Despite the fact that

Nigeria has a functioning stock exchange, it cannot be considered a stock exchange-based

financial system because it does not play a substantial role in the mobilization of funds.56
For new issues, only a few businesses employ it. Despite the fact that Nigeria has over

600,000 companies registered, there are now only about 300 listed on the NSE. The stock

market is a primary source of equity and other financing, as well as a market for

corporate control, in a conventional Stock Exchange-based financial system. The NSE's

management, on the other hand, intends to make it the ultimate Stock Exchange for

advocating Africa's financial markets' development. For the benefit of listed

firms, the continuing development of the Nigerian capital market, and the sustainable

development of the economy, the NSE consistently encourages and supports listed

companies to create worldwide best practices in corporate governance. In addition, the

NSE is dedicated to adhering to the highest international standards and is a member of a

number of international and regional organizations that support the development and

integration of global best practices throughout its operations. The NSE is a member of

IOSCO, the World Federation of Exchanges (WFE), the Sustainable Stock Exchanges

(SSE) Initiative, the SIIA's Financial Information Services Division (FISD), and the

Inter-market Surveillance Group (ISG). It is also a member of the African Securities

Exchanges Association, which it founded (ASEA).

2.2.11 Accountability and Good corporate Governance

Good governance involves accountability which cannot be enforced without

transparency in accordance with the rule of law. Sreeti (2017) opines that those charged

with governance are held accountable by evaluating their decisions on transparency,

inclusivity, equity and responsibility. Governmental bodies, private sectors, stakeholders

and civil society organisations existing within the environment of the local government

are accountable to the communities who will be affected by its decisions or actions in

near time future. Accountability cannot be enforced without transparency and the rule of

law. Governing bodies are held accountable to the communities for the best interest of the

local government area. Delivering of quality outcomes to meet the needs of the

communities while utilising the best of the available resources mitigate corruption, social

trust and inequality. Bad governance creates loop holes for ineffective economies and

difficulty in meeting the needs of the masses. Accountability will help in monitoring and

maintain good standard of living.

2.2.12 Status of Accountability in Nigeria

It is not that the concept of accountability is being contested by Nigerians. The concept has

passed through the stages of indignant rejection, reasoned objection and qualified opposition, but

has reached the stages of qualified endorsement and indeed proud government.

As it moves towards the final stage of dogmatic propagation there are several variables which

appear to be stagnating its accountability. These include:

I. The motivation and orientation of those involved in discarding accountability.

II. Etra-mural interference by other agents that influence not only the citizens, but also

behaviour and character of the government.

III. The role of government in ventilating positive efforts towards accountability.

IV. The competence or incompetence of leaders.

V. The local government may play either positive or negative role in accountability.
VI. They senate governors, society and mass media may play a positive or damaging role in

accountability.

2.2.13 Factors Influencing Accountability

There are various factors which influence accountability in our communities. These are as

follows:

1. Relevance of purpose.

2. Clearly defined objective.

3. Identification of competent personnel involved.

4. Choice of instruments for assessment.

5. Assessment practices and methods.

6. Provision of incentives for assessors.

7. Identification of support agencies.

8. A seminar for support agencies.

9. Government involvement.

10. Follow-up assessment for accountability purposes.

The effectiveness of our governmental programmers has to be tested in order to justify the

taxpayer’s sacrifice and the government’s investments in the public system. It is necessary for

the office operators whether citizens, administrators or directors etc. and at the supporting

agencies to be mobilized for a total success in accountability.

2.2.14 Historical Overview of Three Local Government Area

The Three local government includes Ojo, Badagry and Alimosho Local Government.

Ojo Local Government

Ojo local government area is one of the twenty LGAs in Lagos state, south west geopolitical

zone of Nigeria. The LGA is made up of several districts which includes Ira, Alaba, Ojo,

Okokomaiko, Shibiri, Abule Ade, Idoluwo, and IIogbo. Down the ages, great nations and

political domains were powered by certain conditions and features. In the Nigeria situation, local

political administration or what could be better described as local government arose under the

impetus of internal and external dynamics and ingenuity of the helmsmen.

Badagry Local Government

Badagry local government area is one of the twenty LGAs in Lagos state, Southwest Nigeria.

The headquarters of the area are in the town of Ajara and the LGA compares of a number of

town and villages which includes Oke-oko, Iworo-Ajido, Gbaji, Egan, Mowo, Ekunpa, Popoji,

and Farasime.

Alimosho Local Government

Alimosho local government area is located in the Ikeja division of Lagos state, southwest

Nigeria and is the state’s largest local government area. Alimosho LGA consists of 6

council Development Area to increase efficiency in Administration and these include

Agbado, Okeodo, Ayoba/Ipaja, Egbe/Idinmu, Mosan Okunola, Ikotun/Igando, and

Egbeda/Akowonjo
2.3 THEORETICAL REVIEW

2.3.1 The Agency Theory

It was established by Demsetz and Alchian (1972) with roots from the economic theory

and then Meckling and Jensen (1976) developed it. The theory maintains, managers are

not going to ensure maximization of shareholders’ returns unless ideal structures of

governance are executed in the big corporation towards safeguarding the shareholders’

interests. Based on Meckling and Jensen (1976), the relation between management and

owners is described as principals involve agents towards performing services on behalf of

them. As used in Corporate governance, this theory imposes a serious challenge for

distant or absent stockholders or owners who recruit professional executives for purposes

on acting on the stockholder’s behalf. One of the major assumption of this theory is, there

is a high possibility of an agent becoming opportunistic and self-interested. This brings

about the view that an executive, acting as the agent, is going to be serving self-interests

instead of the principal’s interests. To mitigate those kind of challenges, the principal is

going to cater for costs of agency which come from the urge of bringing in incentives

which put in line the executive’s interests with the shareholder’s and expenses bore by

the need of inspecting the conduct of the executive towards preventing the abuse of the

interests of the owner. It’s key noting that this theory tends to be deductive in its

approach. Assumptions of the theory have become subject of wide empirical studies

though this has normally relied on assessing different propositions relating to large sets of

data. In this theory’s criticism, theorists have heavily explored the success of the different
mechanisms structured to make the concerns of the policymaking to serve the interests of

the bondholders. Currently, a number of empirical studies have ambiguously based on the

association between proper governance and performance of the firm. The assumption of

this theory have nonetheless become influential towards shaping modifications in systems

of corporate governance. In this case, its fundamental to have a clear illustration on the

difference between market-oriented and external mechanisms that are board-based.

According to governance of a market, it is critical to have integrity and openness of

monetary disclosures to the stock market operation in determination of the share prices of

a firm and its principal market valuation. The theory of Agency is important because it

identifies the SMEs ownership from agents. Through this theory, a board pursues a

conformance role to safeguard the interest of the principal through overseeing SMEs

management and monitoring compliance. This theory recognizes the board’s role in

giving service to members through ratification of decisions that the managers

have made and inspecting execution of the decisions. Agents are going to behave

opportunistically, getting the most out of their benefit at the principal’s expense. As a

result, a control pattern must be imposed on the agents to ensure that they perform as

much as possible for the shareholders. The costs of monitoring force a principle to

appoint an external auditor who forms part of controls measures put in place

2.3.3 STAKEHOLDERS THEORY.

Stakeholder theory as propounded by Edward Freeman in 1984, integrated the

accountability of management to a broad range of stakeholders. It states that managers in

organisations have a network of relationships to serve; these include the suppliers,

employees and business partners. The theory focuses on managerial decision-making and

interests of all stakeholders have intrinsic value and no set of interest is assumed to

dominate the others. Its relevance to this study is hinged on its position that a firm, in this

case, media organisation should create value for all stakeholders and not just

shareholders. This argument, no doubt, is a major factor in the growth and sustainability

of

any media organisation.

2.3.4 Stewardship Theory

The dilemma will intensify when shareholders and managers disagree over their views on

their role. If shareholders expect stewardship but the managers act as agents, the

executives will be likely to make use of the value of the company for their purposes. If

they are oriented for stewardship and shareholders react as consistent, tight controllers,

the managers will become frustrated, quit, or underperformed (Baker & Anderson, 2012,

p.247).

The Stewardship theory, up to now, has also received quite a lot of criticism. In listed

companies, for example, shareholders are further and further away from the company and

not nominating members of the board. They argue that financial reports are easily

understood for experts only. The company lacks transparency in complicated issues and

Board members are not truly accountable to shareholders. Others argue that the
Stewardship theory is rooted in law so it is nominal, it emphasizes what to do or even

promotes it. Since the collapse of companies in the late 20th and early 21st century,

Tricker (2012) argued that the trust members of the BOD have under the stewardship

model has been eroded, this causes adverse effects on investors, shareholders, and the

community

2.4 EMPIRICAL REVIEW

Mayowa, Olusola and Olaiya (2021) examined the impact of corporate governance on

firm performance using the accounting measures based on the profitability status of the

companies depending on cash flows and inflow from the income statement. The ex-post

facto research design was employed. In a sample of selected consumer goods companies,

the study revealed that board size has positive significant effect on return on sales. Board

size and board independence has positive significant effect on profit margin. It also

revealed that board size and board independence negative significant effect on operating

cash flow. Based on the findings, it is recommended that the organization should take

cognizance of its board size since it influences the rate of turnover which is an intrinsic

component of the overall performance of the organization. The organization should make

sure the board size is regulated on a low-cost reduction basis so it does not induce a

negative impact on the profitability status of the organization. Manukaji (2020)

examined the effects of corporate governance on the productivity of quoted agricultural

firms in Nigeria.
Specifically, the study examined the effect of director’s remuneration on productivity of

Agricultural firms in Nigeria; Assessed the effect of board size on productivity of quoted

agricultural firms in Nigeria; Ascertained the effect of board duality on productivity of

quoted agricultural firms in Nigeria and investigated the effect of board gender on of

quoted agricultural firms in Nigeria. The study adopted Expost facto research design and

descriptive, correlation and multiple regression analysis for the data analysis. The study

revealed that corporate governance practices positively influenced productivity of

agricultural firms in Nigeria. Again, the findings of the study indicate that companies

with higher number of board size affected the productivity positively as measured by

sales growth. The remuneration of directors had positive and significant influence on

productivity, board gender and board dualities had positive influence on productivity

although not statistically significant. The study therefore recommends that agricultural

firms should determine the optimum payment for the directors that will not affect

productivity and the size of board should be maintained in other to create equilibrium

between the size of the board and the amount they will be able to maintain in other not to

affect performance.

Olayiwola (2018) investigated the influence of corporate governance (CG) on the

performance of companies. The objectives of this study were to respectively analyze and

determine, individually and jointly, the influence of board size, board composition and

audit committee size on corporate performance (CP). The study employed exploratory
research design. Ten (10) listed firms were chosen through a purposive sampling

technique and data extracted from the annual reports of these firms from year 2010 to

2016. A panel data regression was used to analyse the data. CG was proxied with board

size (BS), board composition (BC) and audit committee size (ACS) while performance

was proxied with net profit margin (NPM). Findings revealed that board size had a

significant negative correlation with NPM, board composition had a significant positive

correlation with NPM, audit committee size had an insignificant correlation with NPM

and board size, board composition and audit committee size had a significant joint

effect on NPM. Thus, it was concluded in the study that smaller board size will increase

performance and the board composition should consist more of the non-executive

directors while the audit committee also should be reviewed from time to time. Kajola,

Onaolapo and Adelowotan (2017) examined the relationship between corporate board

size and financial performance of 35 non-financial firms listed on Nigerian Stock

Exchange. The study covers the period 2003-2014. Using panel data regression analysis

and Fixed effects model as estimation technique, result reveals a positive and significant

relationship between board size (surrogated by the natural log of number of directors on

the board) and the two financial performance proxies (Return on assets and Return on

equity). The outcome of the study is consistent with some prior empirical studies and

provides evidence in support of the argument that companies with larger board members

do harness the divergent views of members, thereby coming up with informed decisions

that will improve the financial performance of companies under their watch. It is
also difficult for chief executive of companies to influence members of the board. For

higher financial performance to be achieved, this study recommended an average board

size of not less than 9 members for a listed company.

Osundina, Olayinka & Chukuma (2016) examined corporate governance and financial

performance of selected manufacturing companies in Nigeria. The objective of this study

is to empirically investigate the relationship between corporate governance (measured by

Board Structure index, Ownership Structure index and Audit Committee index) and

firm’s performance (measured by Return on Asset) of selected Nigerian manufacturing

companies. The study adopted ex-post facto research design. Random sampling

was used to select 30 companies out of a total population of 45 manufacturing companies

listed on the Nigerian Stock Exchange, for a time period of 2010 to 2014. Secondary data

(financial and non-financial) were collected from the annual reports and accounts of the

selected listed manufacturing companies. Multiple regression analysis and descriptive

statistics were used in analyzing the data. F-stat and t-stat were used to test the

hypothesis. The results of the study show that Board structure index had a significant

positive relationship with performance (ROA) of the sampled manufacturing companies.

Also, it was found that Audit committee index had a positive but insignificant

relationship with the performance (ROA) of the sampled manufacturing companies,

while Ownership structure index had an insignificant negative relationship with

performance (ROA) of the sampled manufacturing companies. In conclusion,

the study revealed that the performance indicator (ROA) related with each component of

the Corporate Governance Index in a peculiar manner. It is therefore recommended that

reform efforts should be directed towards improving the corporate governance of listed

Nigerian manufacturing companies, especially emphasis should be devoted to the

variables of Ownership Structure and Audit Committee.