Corporate Governance and Organizational Profitability: Empirical Evidence from Quoted Natural Resources Firms in Nigeria (2010-2015)

Abstract

Following the prominent accounting scandals and fraudulent financial reporting, the emphasis on the need for corporate governance sprung up to improve organizational profitability. The general objective of this study is to determine the relationship between corporate governance and organizational profitability with a focus on quoted natural resources firms in Nigeria from 2010-2015. Three specific objectives were derived also. The study is anchored on stakeholder, stewardship and agency theories. Three research questions and three hypotheses were formulated in line with the specific objectives. In pursuance of the objectives of the study, ex-post facto research design was adopted. The study worked with a sample size of five companies using panel sampling method. This study made use of secondary data obtained from the Nigerian Stock Exchange (NSE) fact book and annual reports and accounts. The relevant data were subjected to statistical analysis using Pearson coefficient of correlation, multiple regression analysis and heteroskedasticity test. The result of this study reveals that there is a positive and significant relationship between corporate governance and organizational profitability. The results reveal that board size, audit committee independence and board ownership have a significant relationship with Return on Equity, Return on Assets and Profit Margin of quoted natural resources firms in Nigeria.

Keywords: Corporate Governance, Profitability and Audit Committee Independence

JEL Classification: M15, M24, M33