CORPORATE GOVERNANCE MECHANISM AND STOCK PRICE PERFORMANCE: INSIGHTS FROM NIGERIA

Abstract

Over the years, firms from financial, real estate and construction sectors in Nigeria have been challenged heavily by corporate governance lapses. This seems to have affected major spheres of performance and specifically market stock price of the firms, thereby necessitating investigation into its level of influence. This study assessed how corporate governance practices affected listed businesses in Nigeria's firm performance. The study's goal is to assess the impact of board diversity, independence, size, and ownership on the stock price performance of a sample of Nigerian public companies. In order to achieve this, the study used secondary data, which was based on an ex post facto research strategy and used a pooled data set gathered from sixteen (16) quoted businesses during the period between the 2006 and 2019 financial period. Descriptive statistics, correlation matrices, and robust least squares regression analysis techniques were used to analyze the data that had been gathered. The Agency theory and entrenchment hypothesis served as the study's pillars. The results support the entrenchment hypothesis, which contends that large board ownership percentages have a negative impact on stock price performance. In particular, we discover that the stock price performance of listed companies in Nigeria throughout the study period was negatively impacted by the corporate governance variables of board size and board ownership, both of which are statistically significant at1%, 5%, and 10%. The entrenchment effect, which is already at work among our sample companies, leads us to urge, among other things, that consideration be given to the review of board ownership and size in light of the study's findings.