Corporate Governance and Enterprise Success of Selected Deposit Money Banks in Nigeria

328 Pages Posted: 16 Oct 2020

Date Written: August 27, 2020

Abstract

The Enterprise Success (ES) of the banking industry is an important factor for the economic development of a nation. The success of deposit money banks (DMBs) in Nigeria in terms of market share, business sustainability, organizational survival and firm size has continued to dwindle, suggestive of ineffective corporate governance (CG) dimensions in terms of transparency, accountability, board diversity, director independence and board size. The study examined the effect of CG on ES of DMBs in Nigeria.

The study adopted cross-sectional survey research design. The population comprised 226 board and management staff of the selected DMBs. Total enumeration was used. A validated questionnaire was administered to collect data. The Cronbach’s alpha reliability coefficients for the constructs ranged from 0.72 to 0.84. The response rate was 84.5%. Data were analysed using descriptive and inferential statistics.

Findings revealed that CG had significant effect on ES of selected DMBs in Nigeria (Adj.R2 = 0.423, F(5, 185) = 59.142, p < 0.05). CG dimensions (transparency, accountability, board diversity, director independence and board Size) had significant effect on market share (Adj.R2 = 0.209, F(5, 185) = 11.054, p < 0.05). CG dimensions had significant effect on business sustainability (Adj.R2 = 0.488, F(5, 185) = 37.244, p < 0.05). CG dimensions had significant effect on organizational survival (Adj.R2 = 0.511, F(5, 185) = 40.727, p < 0.05). CG dimensions had significant effect on firm size (Adj.R2 = 0.208, F(5, 185) = 32.893, p < 0.05). Self-regulation had no significant moderating effect on the relationship between CG and ES of selected DMBs in Nigeria (R2 = 0.3795, ΔR2 = 0.0119, ΔF (3.5781)3u, p > 0.05). Social capital had significant moderating effect on the relationship between CG and ES (R2 = 0.6519, ΔR2 = 0.0187, ΔF = 6.0708, p < 0.05). Self-regulation and social capital had significant combined moderating effect on the relationship between CG and ES (ΔR2 = 0.0341, ΔF = 6.4669, p < 0.05).

The study concluded that CG affects ES of DMBs. The study recommended that management of DMBs should ensure transparency, accountability, board diversity, director independence and adequate board size to ensure enterprise success. The management of DMBs should encourage self-regulation and social capital.

Keywords: Accountability, Corporate Governance, Enterprise Success, Self-Regulation, Social Capital

JEL Classification: G21

Suggested Citation

Hassan, Adeyinka Tajudeen, Corporate Governance and Enterprise Success of Selected Deposit Money Banks in Nigeria (August 27, 2020). Available at SSRN: https://ssrn.com/abstract=3682165 or http://dx.doi.org/10.2139/ssrn.3682165

Adeyinka Tajudeen Hassan (Contact Author)

Babcock University ( email )

Nigeria

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