IMPACT OF CORPORATE GOVERNANCE MECHANISM ON RETURN ON ASSET OF NON-FINANCIAL FIRMS LISTED ON NIGERIAN EXCHANGE GROUP (NGX)

Abstract

Corporate Governance (CG) has assumed a generalized concept relating to companies well-being. Scandals occasioned by Corporate Governance (CG) failure continued to raise concerns about the effectiveness of CG designs and implementation as it affects Financial Performance (FP) of selected Non-Financial Firms (NFFs) in Nigeria. This study therefore examined the impact of corporate governance mechanisms on selected financial performance indicators of listed NFFs in Nigeria from 2013-2022. Ex-post facto research design wherein secondary data sourced from published annual report and accounts of listed NFFs, over a ten (10) year period of 2013-2022, were employed to relate CG with FP of listed NFFs. Population of the study comprised all the 111 listed NFFs in Nigeria as at 31^st December, 2022 from where a sample size of 37 firms was selected using purposive sampling technique. The relationship between Board Accountability Mechanism (BAM), Disclosure Mechanism (DM), Transparency Mechanism (TM), and Audit Committee Mechanism (ACM) with Return on Asset (ROA) was analyzed using Generalized Method of Moment (GMM) at 5% level of significance. Result revealed that ACM (β = 1.021945; ρ = 0.0000), DM (β = 3.834934; ρ = 0.0000), had positive significant relationship on ROA while BAM (β = -0.801284; ρ = 0.0000) and TM (β -1.889264; ρ = 0.0000) had negative but significant impact on ROA. The result concludes that factors other than full implementation of corporate governance mechanisms impact financial performance of listed Non-Financial Firms in Nigeria.