Effect Of Corporate Governance On Financial Performance Of Deposit Money Banks In Nigeria

Abstract

The main objective of the study is to examine the extent to which corporate governance affect financial performance of deposit money banks in Nigeria. The study specifically determined the extent to which board size, board composition and audit committee size affect profit margin of deposit money banks in Nigeria. The study adopted an ex-post facto research design. Secondary data was sourced from the annual reports of the sample of five deposit money banks for ten (10) years period, spanning from 2014-2023. The data collected was analyzed using descriptive analysis and multiple regression analysis. The findings of the study include: Board size has a negative and insignificant effect on the net profit margin of listed deposit money banks in Nigerian (β = 1.7334; p-value = 0.089); Board Composition has a significant effect on the Net Profit Margin of listed deposit money banks in Nigeria (β = 2.4904; p-value = 0.016); Audit committee size has no significant effect on the Net Profit Margin of listed deposit money banks in Nigeria (β = -0.8263; p-value = 0.4129). The study highlights that while quantity of governance bodies (board size, and audit size) may not directly influence financial performance, the quality and composition of these bodies are vital. For deposit money banks in Nigeria, focusing on the expertise and diversity of board members is essential for enhancing financial performance.