CORPORATE GOVERNANCE STRUCTURE AND FINANCIAL PERFORMANCE IN NIGERIAN DEPOSIT MONEY BANKS

Abstract

This study examined the effect of corporate governance structure on the financial performance of deposit money banks in Nigeria from 2015 to 2024. The study is anchored on agency theory, and employed the ex-post facto research design. A two-step dynamic panel Generalized Method of Moments (GMM) estimation technique was employed to analyze data obtained from the annual reports of 11 listed banks. Financial performance is measured using Return on Equity (RE), while corporate governance structure was proxied by board size, board composition, board diligence, and ownership concentration. The preliminary analyses such as descriptive statistics, panel unit root test, and correlation tests, were conducted before model estimation. The results showed that board size has a significant negative effect on bank performance, suggesting that larger boards reduce efficiency and decision-making effectiveness. Board diligence exerted a positive and significant effect, implying that frequent board meetings enhanced oversight and profitability. However, board composition and ownership concentration showed positive but statistically insignificant effects on bank performance. The study concluded that board structure, particularly board size and board diligence, played a crucial role in shaping financial performance. It recommended based on findings that regulatory authorities should promote lean, active, and competent boards to strengthen governance effectiveness to ensure sustainable profitability in Nigeria’s banking sector.