CORPORATE GOVERNANCE PRACTICES AND FINANCIAL PERFORMANCE OF MANUFACTURING COMPANIES IN NIGERIA

Abstract

Persistent inconsistencies and declines in corporate financial performance remain a critical concern for many firms, yet the precise role of corporate governance in addressing this problem is not fully understood. This study examined the effect of corporate governance practices on the financial performance of listed manufacturing companies in Nigeria, with emphasis on dynamic governance indicators. The study adopted an ex-post facto research design and employed a purposive sampling technique to select ten (10) manufacturing firms listed on the Nigerian Exchange Limited (NGX). Secondary data was obtained from published annual reports and financial statements of the firms sampled from the period of 2014 to 2024. Both descriptive and inferential statistical methods were applied to analyze demographic variables, research questions and hypothesis testing using E-views at 5% level of significance. The findings revealed that corporate governance had significant effect on return on assets (ROA) (Adjusted R2 = 0.757, F = 20.827, p < 0.05). The results also revealed that corporate governance had a significant effect on return on equity (ROE) (Adjusted R2 = 0.349, F = 4.423, p < 0.05). The results also revealed that corporate governance had a significant effect on return on capital employed (ROCE) (Adjusted R2 = 0.279, F = 3.470, p < 0.05). Finally, the results revealed that corporate governance had a significant effect on asset turnover ratio (ATR) (Adjusted R2 = 0.555, F = 8.947, p < 0.05). This study concluded that a comprehensive and sector-inclusive approach to corporate governance, incorporating dynamic governance practices, significantly enhances financial performance prediction in Nigeria’s manufacturing firms. The study recommended that companies and regulatory bodies adopt advanced governance frameworks and industry-specific practices to boost firm performance sustainably.