CORPORATE GOVERNANCE AND FIRM PERFORMANCE

(EMPIRICAL EVIDENCE FROM SELECTED LISTED COMPANIES IN NIGERIA)

By

PEACE ONUWABHAGBE OKOUGBO (04AA00161)

Presented To

Department of Accounting

Certification----------------------------------------------------------------..iii
Declaration-------------------------------------------------------- - - - ..iv
Dedication ---------------------------------------------------------------- - .v
Acknowledgment------------------------------------------------.---------- - ..vi
Abstract------------------------------------------------.------------.------..vii
Table of Contents------------------------------------------------------------..ix
List of Figures --------------------------------------------------------------.xiv
List of Table -------------------------------------------------------------- - .xv

Chapter One: Introduction----------------------------------------.--------..--.1
1.0  Background to the study---------------------------------------------- - ..1
1.1  Statement of Problem--------------------------------------------------..2
1.2  Objectives of Study----------------------------------------------------.3
1.3  Research Questions-------------------------------------------------- - 4
1.4  Hypotheses---------------------------------------------------------- - 4
1.5  Scope of Study--------------------------------------------------------.4
1.6  Significance of Study-------------------------------------------------- - 5
1.7  Limitations of Study----------------------------------------------------.6
1.8  Methodology----------------------------------------------------------6
1.9  Definition of Terms-------------------------------------------------- - 7

Chapter Two: Literature Review----------------------------------------.--.----.9
2.1  Introduction --------------------------------------------------------.--.9
2.2  Conceptual Framework------------------------------------------------ - .10
2.2.1  Agency Concept---------------------------------------------------- - 10
2.2.2   Corporate Governance Mechanisms for Reducing Agency Costs----------------..14
2.2.2.1 Board Size---------------------------------------------------------- - 14
2.2.2.2 CEO Duality-------------------------------------------------------- - .15
2.2.2.2 Ownership Concentration------------------------------------------------17
2.2.2.3 Audit Committee Independence------------------------------------------..18
2.2.3  Summary of Theory, Hypothesis and Conceptual Model---------------------- - .19
2.3  Theoretical Framework of Corporate Governance---------------------------- - .21
2.3.1  Stakeholder Theory---------------------------------------------------- - 22
2.3.2  Stewardship theory---------------------------------------------------- - 22
2.3.3  Resource Dependency Theory (RDT)------------------------------------ - 22
2.3.4  Agency theory-------------------------------------------------------- - 23
2.3.5  Assumptions of Agency Theory------------------------------------------ - .24
2.3.6  Limitations of Agency Theory--------------------------------------------..25
2.4.  Measuring Firm Performance-------------------------------------------- - .26
2.5  Measuring Control Variables--------------------------------------------.--28
2.5.1  Company Size----------------------------------------------------------29
2.5.2  Leverage------------------------------------------------------------ - ..28
2.6  Corporate Governance and Performance Measures---------------------------- - 29
2.7  Methodological Review--------------------------------------------------.31
2.8  Corporate Governance Measures in Nigeria----------------------------------..32
2.8.1  The Role of the Board of Directors, Chairman, and Chief Executive Officer--------..32
2.8.2  The Role of the Audit Committee------------------------------------------..33

Chapter Three: Research Methodology ----------------.------------------..------.34
3.1  Introduction------------------------------------------------------------34
3.2  Research Design--------------------------------------------------------.34
3.3  Population of Study---------------------------------------------------- - 34
3.4  Sample size and Sampling Technique------------------------------------..--.34
3.5  Data Gathering Method--------------------------------------------------..35
3.5.1  Sources of Data--------------------------------------------------------. 35
3.5.2  Instruments of Data Collection----------------------------------------..----35
3.5.3   Validity and Reliability of Instruments--------------------------------------.35
3.6  Data Analysis Method-------------------------------------------------- - 36
3.6.1  Methods of Data Analysis------------------------------------------------.36
3.6.2  Instruments for Data Analysis (Including formulae) ----------------------------36
3.6.3  Model Specification---------------------------------------------------- - 37

Chapter Four: Data Presentation and Analysis --------------------..--------.----.. 39
4.1  Introduction----------------------------------------------------------..39
4.2  Data Presentation------------------------------------------------------..39
4.2.1  Industry Based Presentation----------------------------------------------.39
4.3  Data Analysis -------------------------------------------------------- - .41
4.3.1  Summary Statistics------------------------------------------------------41
4.3.2  Correlation Analysis----------------------------------------------------..46
4.3.3  Econometric Analysis----------------------------------------------------47

Chapter Five: Summary, Findings, Conclusion And Recommendations--------------..52
5.1  Introduction----------------------------------------------------------..52
5.2  Summary of Work Done------------------------------------------------ - 52
5.3  Findings--------------------------------------------------------------.53
5.3.1  Theoretical Findings----------------------------------------------------..53
5.3.2  Empirical Findings------------------------------------------------------.54
5.4  Conclusion -------------------------------------------------------- - --.55
5.5  Recommendations--------------------------------..----------------------55
5.6  Suggestions for Further Studies---------------------------------------- - - 56

References ---- - ------------------------------------------------------.58
Appendices -------------------------------------------------------------- - --66
Appendix 1    Sample Companies and Their Industries----------------------.--66
Appendix 11   Generalised Least Square Regression Result Of Estimated Model (Fixed
Effects) --------------------------------------------------68.