Corporate Governance Procedures and Nigerian listed Companies' Productivity
DOI:
https://doi.org/10.54960/jfcg.v6i2.82Keywords:
Governance, rising economies, productivityAbstract
The study examined the relationships between labour productivity and corporate governance procedures publicly traded firms in Nigerian using a sample of 1376 firm-year observations during1989-2020. The research employed a panel data technique to find the relationship between the dependent and independent variables. The Hausman test findings show that the Fixed Effect is the best estimator due to the differences between firms. Three predictor factors: board size, block holding, and company size have a positive and substantial relationship with the labour productivity of listed firms in Nigeria, according to the results of the panel regression analysis. However, directors' shareholding, board independence, and an independent audit committee are not significantly correlated with labour productivity of Nigerian publicly traded companies. Only leverage has a negative association with the dependent variable. The study showed that an ideal board size is one where increasing board size benefits Nigerian enterprises' production while doing so at a decreasing rate; as a result, the relationship between the two variables is quadratic. Growth in firm size and institutional investors also enhance dependent variable. On the other hand, more borrowing lowers productivity. However, the directors' shareholding, the presence of independent directors, or the independence of the audit committee is indifferent to labour productivity. This work contributes to the corpus of knowledge by expanding the study's time period from the normal ten years covered by other studies to thirty-four years. Additionally the use of labour productivity as a performance metric is unusual among experts of developing nations, including Nigeria.
Downloads
References
Adebiyi, W. K. (2017), Board composition and financial reporting quality of deposit money banks in Nigeria. International Journal of Innovative Finance and Economics Research, 5(4):97-104.
Adelegan, O. J (2007a) Corporate Governance in Nigeria. In Kostyuk, A.N, Braendle U,C and Apreda, R. (Ed.) Corporate Governance Virtus interpress: Ukraine.
Adelegan, O.J. (2007b). Board Changes and Efficiency of the Nigeria Stock Market In Corporate Board Role, Duties and Composition . Issue 2, Vol. 3. Virtus Interpress. Ukraine. 5.
Adenikinju, O &. Ayonrinde, F. (2001). Ownership Structure, Corporate Governance and Corporate Performance: The Case of Nigerian Quoted Companies. AERC Biannual Research Workshop , Nairobi, May. 6.
Adewuyi, O. A. & Olowookere, E.A. (2009), ‘‘Impact of governance instruments on the productivity of Nigerian listed firms’’, ICFAI University Journal of Corporate Governance, 8(3/4), 51-74.
Aebi, V., Sabato, G., & Schmid, M. (2012) Risk management, corporate governance and bank performance in the financial crisis, Journal of Banking & Finance 36(12), 3213.
Alaghbari, W, Al-Sakkaf, A.A, Sultan, B. (2019). Factors affecting construction labour productivity in Yemen. Int. J. Constr Manage. 19(1):79–91
Arellano, C., Yan B., & Jing Z., (2012) “Firm dynamics and financial development,” Journal of Monetary Economics, 59 (6), 533–549
Boachie, C. (2021). Corporate governance and financial performance of banks in Ghana: The moderating role of ownership structure. International Journal of Emerging Markets. https://doi.org/10.1108/IJOEM-09-2020-1146 [Crossref], [Google Scholar]
Boshnak, H. (2021) Corporate Governance Mechanisms and Firm Performance in Saudi Arabia International Journal of Financial Research 12(3):446
Brown, L. D. & Caylor, M.L. (2004) corporate governance and firm performance. Working Paper, Georgia State University, (Dec). 18.
Buera, F. J. & Yongseok S., (2011) “Financial Frictions and the Persistence of History: A Quantitative Exploration,” Journal of Political Economy, 121(2) ,22
Buera, F. J. & Yongseok S., (2013) “Financial Frictions and the Persistence of History: A Quantitative Exploration” Journal of Political Economy,121(2),221-272.
Cadbury, A. (1992). The Code of Best Practice, Report of the Committee on the Financial Aspect of Corporate Governance. London: Gee and Co Ltd.
Chen, Z., Du, J., Li, D., & Ouyang, R. (2013). Does foreign institutional ownership increase return volatility? Evidence from china. Journal of Banking & Finance, 37(2), 660.
Coircelli, F., Driffield, N., Sarmistha, P. & Isabelle R. (2012) “When does leverage hurt productivity growth? A firm-level analysis” Journal of International Money and Finance 31, 1674-1694.
Code of Corporate Governance for Public Companies in Nigeria (2003) www.sec.gov.ng
Companies and Allied Matters Act (1990) as amended
Cooley, T. F. & Quadrini, V. (2001) “Financial markets and firm dynamics,” American Economic Review, 1286–1310.
Core, J., Guay, W. & Rusticus, T. (2005) Does Weak Governance Cause Weak Stock Returns? An Examination of Firm Operating Performance and Analysts’ Expectation, University of Pennsylvania. 24.
Dalton, D. R., Daily, C. M., Johnson, J. L., & Ellstrand, A. E. (1999). Number of directors and financial performance: A meta-analysis. Academy of Management Journal, 42(6), 674- 686.
Dixit S, Pandey A.K, Mandal S.N, Bansal S. (2017). A study of enabling factors affecting construction productivity: Indian scnerio. Int J Civ Eng Technol. 8(6):741–758.
Dixit S., Mandal S.N, Thanikal J.V, Saurabh K. (2019). Evolution of studies in construction productivity: A systematic literature review (2006–2017). Ain Shams Eng J. 10(3):555–564.
Edmans, A, (2014) Blockholders and Corporate Governance (July 25). ECGI- Finance Working Paper No. 385. Available at SSRN: https://ssrn.com/abstract 2285781
Eisenhardt, K. M. (1989). Agency Theory: An Assessment and Review. Academy of Management Review 14 (1), 57-74 Retrieved from http://www.wikipedia 21/10/2015
Endang P. Apriatni & Arief Youlianto (2021) Moderating effects of corporate governance m mechanism on the relation between capital structure and firm performance, Cogent m Business & Management, 8(1) 1-22, 1866822, DOI: 10.1080/23311975.2020.1866822
Gaitán S. C., Herrera, H. & Pablo E. (2017) Corporate Governance and its Effect on Productivity under Different Business Environments: Evidence from Latin America: https://www.researchgate.net/publication/318458086, retrieved on 12. 2. 2020
Gatti, R.; & Love, I. (2006) “Does access to credit improve productivity? Evidence from Bulgarian firms” World Bank Policy Research Paper No. 3921.
Gbadebo, A. O. (2017) Effect of Corporate Governance Mechanisms on Performance of Listed Nigerian Firms, unpublished Ph. D. Dissertation, Nnamdi Azikiwe University Awka,
Gbadebo, A. O. (2016) Impact of Corporate Governance Mechanisms on Financial Performance of Deposit Money Banks in Nigeria Sahel Analyst: Journal of Management Sciences 14(5) 44-57 University of Maiduguri
Ghosh, S. (2009) “Productivity and financial structure: evidence from Indian high-tech firms” Global Business Review 10, 261–278
Girma, S., & Vencappa, D. (2015) “Financing sources and firm level productivity growth: evidence from Indian manufacturing” Journal of Productivity Analysis 44, 283-292.
Gopinath, G., Kalemli-¨Ozcan, S Karabarbounis, L & Villegas-Sanchez, C. (2017) Capital Allocation and Productivity in South Europe The Quarterly Journal Of Economics, 132(4), 1915–1967
Guluma T. F. (2021) The impact of corporate governance measures on firm performance: the influences of managerial overconfident: Future Business Journal 7(50)
Gupta, M., & Newalka, G. (2015). “Impact of Corporate Governance on the Profitability of a Firm”: Empirical study on National Stock Exchange, 2nd International Conference of Science, Technology and Management, University of Delhi, India, 572-578.
Hassan, M.A. (2014) Employee Welfare Programme: Panacea Towards Improving Labour Productivity in the Service Sector in Nigeria, Mediterranean Journal of Social Sciences 5(10) 78-81
Hay, D. & Morris, D. (1979) Industrial Economics: theory and evidence Oxford University Press.
Herdjiono, I. & Sari, I. M. (2017) The Effect of Corporate Governance on the Performance of a Company. Some Empirical Findings from Indonesia Journal of Management and Business Administration Central Europe 25(1) 33–52, ISSN 2450-7814; e-ISSN 2450- 8829
Hill, C. & Snell, S. (1989). Effects of Ownership Structure and Control on Corporate Productivity, Academy of Management Journal, 32, 25–46..
Khan, A. & Thomas, J. K. (2013 ) “Credit Shocks and Aggregate Fluctuations in an Economy with Production Heterogeneity,” Journal of Political Economy, 121(6), 1055–1107.
K¨oke, J. (2001), Corporate governance, market discipline, and productivity growth Centre for European Economic Research Mannheim, Germany, ZEW Discussion Paper No. 01-55
ftp://ftp.zew.de/pub/zew-docs/dp/dp0155.pdf, retrieved on January 15, 2020
Kyereboah-Coleman, A., & Nicholas- Biekpe, N. (2005). “Corporate Governance and the performance of Microfinance Institutions (MFIs) in Ghana”, Working paper 4330-05, UGBS, Legon
Leung, D., Meh, C. & Terajima, Y.. (2008a) “Are There Canada-U.S. Differences in SME
Lawal, B. (2012). ‘Board dynamics and corporate performance: Review of literature, and empirical challenges’, International Journal of Economics and Finance, 4(1), 22-35. Financing?” Bank of Canada Working Paper No. 2008–41.
Leung, D., C. Meh, and Y. Terajima. (2008b) Productivity in Canada: Does Firm Size Matter? Bank of Canada Working Paper. Bank of Canada Review • Autumn 5-14
Li, H. (2016) Leverage and Productivity, Federal Reserve Bank of San Francisco https://sites.google.com/site/tohuiyu/. email: tohuiyu@gmail.com retrieved 24.2.2020
Magbagbeola, N.O. (2005). Governance Structure, Managerial Characteristics and Firm Performance in the Nigerian Banking Industry . Final Report Submitted to the AERC, South Africa (Dec). 55
Min B. S. & Smyth R., (2014) corporate governance, globalization and firm productivity Journal of World Business 49(3), 372–385
Mnasri, K., & Ellouze, D. (2015) ownership structure, product market competition and productivity Management Decision, 53(8), 1771-1805
Momade M.H, Shahid S, Hainin M.R, Nashwan M.S, Tahir U.A. (2020). Modelling labour productivity using SVM and RF: a comparative study on classifiers performance. International Journal of Construction Manage. 1–11. DOI: 10.1080/15623599.2020.1744799.
Momade M.H, Hainin M.R. (2018a). Problems affecting squatter settlements in Nampula, Mozambique. Int J Eng Technol. 7(4):5022–5025.
Momade M.H, Hainin M.R. (2018b). Review of sustainable construction practices in Malaysian construction industry. Int J Eng Technol. 7(4): 5018–5021.
Moses, T. (2019), Board characteristics, audit committee composition, and financial reporting in Nigeria. International Journal of Innovative Social Sciences & Humanities Research, 7(1), 37-45
Mousa, G.A. & Desok, A.M. (2012). The Association between Internal Governance Mechanisms and Corporate Value: Evidence from Bahrain, Asian Academy of Management Journal of Accounting and Finance, 8(1), 67-91
Muhammad N.Z, Sani A, Muhammad A., Balubaid S., Ituma E.E, Suleiman J.H. (2015). Evaluation of factors affecting labour productivity in construction industry: a case study. J Teknol. 77(12):87–91.
Mundakkad, P. (2018) Firms' leverage and labour productivity: a quartile regression approach Economics Bulletin, 38(4), 2331-2344
Musso, P. & Stefano S. (2008) “The impact of Financing constraints on Firm survival and growth” Journal of Evolutionary Economics 18, 135-149.
Nucci, F., Pozzolo, A. & Schivardi, F. (2005) “Is firms’ productivity related to its financial structure? Evidence from microeconomic data” Rivista di Politica Economica, SIPI Spa 95, 269– 290.
Nickell, S. & Nicolitsas, D. (1999) “How does financial pressure affect firms?” European Economic Review 43, 1435–56.
Nunes, P.; Sequera, T. & Serrasqueiro, Z. (2007) “Firms’ leverage and labour productivity: a quantile approach in Portugese firms” Applied Economics 39, 1783–1788.
Nwafor, P. K. (2022) Effects of Corporate Governance on the Productivity of Quoted Agricultural Firms in Nigeria International Journal of Business & Law Research 10(1):14-25 Seahi Publications
OECD, (2001). Organisation for Economic Cooperative Development (OECD), Principles of Corporate Governance. Paris: Organisation for Economic Cooperative Development.
OECD 2002 Key Indicators of the Labour Market (KILM): 2001-2002, International Labour Organisation, Geneva, 621
Ohueri C.C, Enegbuma W.I, Wong N.H, Kuok K.K, Kenley R. (2018). Labour productivity motivation framework for Iskandar Malaysia. Built Environ Project Asset Manage. 8(3):293-304.
Olowookere, E .A. (2008). Corporate Governance and Firm Performance: The Case of Nigerian Listed Firms, unpublished M.Sc. Dissertation, University of Ibadan
Phan, T. A. & Duong, L. H. (2021). The Effects of Corporate Governance Mechanisms on Firm Performance: Empirical Evidence from Vietnam Journal of Asian Finance, Economics and Business 8(4) 0369–0379.
Reddy, K., Locke, S., Scrimgeour, F., & Gunasekarage, A. (2008). Corporate governance practices of small cap companies and their financial performance: An empirical study in New Zealand. International Journal of Business Governance and Ethics, 4(1), 51
Renneboog, L. (2000) “Ownership, Managerial Control and the Corporate Governance of Companies n Listed on the Brussels Stock Exchange.” Journal of Banking and Finance, 24, 1959-1995
Roslas, L. (1948), International Comparison of Productivity International Labour Review 18, 95
Rubin, A., & Smith, D. R. (2009). Institutional ownership, volatility and dividends. Journal of Banking and Finance, 33(4), 627-639.
Sanda, A., Mukailu, A.S. & Garba, T. (2005). Corporate Governance Mechanisms and Firm Financial Performance in Nigeria. AERC Research Paper 149. 73
Sanusi, J. O. (2002). Promoting Good Corporate Governance in Nigeria: Issues and Challenges. Presented at the 2002 Directors’ Seminar organized by Financial Institute Training Center, Nigeria on 4-6 June.
Sarpong-Danquah, B., Oko-Bensa-Agyekum, K.. & Opoku, E.(2022) Corporate governance and the performance of manufacturing firms in Ghana: Does ownership structure matter? Cogent Business & Management, 9(1) 1-19
Schiantarelli, F. & Sembenelli, A. (1997) “The maturity structure of debt-determinants and effects on firms’ Performance” World Bank Policy Research” Working Paper No.1699.
Schotter, A. (2001). Microeconomics: A Modern Approach 3rd Edition. Addison-Wesley Longman: New York. 74.
Senbet, I. W., & John, K. (1998). “Corporate Governance and Board Effectiveness", Journal of Banking and Finance 22 (May), 371 -403
Setia-Atmaja, L. (2009) Governance mechanisms and firm value: The impact of ownership concentration and dividends. Corporate Governance: An International Review, 17(6),
-709
Shan, Y. G., & McIver, R. P. (2011) corporate governance mechanisms and financial performance in china: Panel data evidence on listed non-financial companies. Asia Pacific Business Review, 17(3), 301
Shiru M.S, Chung E.S, Shahid S, Alias N. (2020). GCM selection and temperature projection of Nigeria under different RCPs of the CMIP5 GCMS. Theoret Appl Climatol.141(3):1611– 1627.
Sveikauskas L, Rowe S, Mildenberger J, Price J, Young A. 2016. Productivity growth in construction. J Constr Eng Manage. 142(10):04016045.
Tian, G. Y., & Twite, G. (2011). corporate governance, external market discipline and firm productivity Journal of Corporate Finance, 17(3), 403
Udo-Aka, U. (1983) Measuring Productivity Issues and Problems, in Osoba, A. M. (ed.): Productivity in Nigeria, Proceedings of National conference: Ibadan, NISER
Wilson, I. (2006). Regulatory and Institutional Challenges of Corporate Governance in Nigeria Post Banking Consolidation. Nigerian Economic Summit Group Economic Indicators, April-June, 12(2) 79.
Xu, X. and Y. Wang. (1999) “Ownership Structure, Corporate Governance, and Firms’ Performance: The Case of Chinese Stock Companies.” Working Paper, World Bank
Yermack, D. (1996), Higher market valuation of a company with a small board of directors,
Journal of Financial Economics 40, 185-211.
Downloads
Published
How to Cite
Issue
Section
