IMPACT OF CORPORATE GOVERNANCE ON THE PROFITABILITY OF LISTED CEMENT COMPANIES IN NIGERIA

Abstract

The study examined the impact of corporate governance on the profitability of listed cement companies in Nigeria. The problem of the study was identified. The specific objectives were formulated in line with the main objective while hypotheses were formulated in accordance with the specific objectives.The scope of the study covers 2015-2021 for the sampled cement companies and those that would likely benefit from the study were specified. The review of the literature was based on the conceptual, empirical and theoretical literature and was strictly based on the specific objectives of the study. Conceptual literatures were reviewed to ascertain the authors understanding of concepts relating to this study. In the same vein, the empirical studies carried out by previous researchers were reviewed to identify relevant gaps in the literature, while theories relating to the study were reviewed and the theory underpinning the study was identified and discussed. The population of the study consists of all the cement companies listed on the Nigerian Stock Exchange (NSE) which were carrying on with st operations in Nigeria to 31 December, 2021. Convenience sample technique was employed in determining the sample size of five (5) firms to be used. The study employs correlational research design to examine the relationship between the explanatory variables on the outcome variable of the five listed cement companies that have consistently published their annual audited financial statements over the period of the study. The data was statistically described, presented, analyzed and interpreted using STATA13 software. Linear regression model was chosen for analysis and interpretation. Other relevant tests include descriptive statistics, Pearson correlation, and variance inflation factor. The result of the linear regression revealed that board size and board composition have insignificant negative impact on the return on assets in Nigeria while managerial shareholding has a significant positive impact on return on assets of quoted cement companies in Nigeria.The study concludes that the relationship between board size and board composition on return on asset is insignificantly negative and as such cement companies must appoint lesser members and lesser non-executive directors into the board in order to improve financial performance while the relationship between managerial shareholding and return on asset is significantly positive therefore managerial shareholding should be maximized to create a strong incentive to reduce the abuse of shareholders resource It was recommended that Cement companies should appoint lesser members into the board base on their skills, education, expertise and experience which will thereby increase financial performance.and also reduce the size of the non-executive directors on the board in order to improve the financial performance of the firm. Nigerian listed cement companies with large managerial shareholdings should be encouraged as this will reduce the abuse of shareholders resources