Corporate Governance Dynamics and Shareholders’ Wealth Maximization in the Nigerian Oil and Gas Industry

Abstract

The research explored how variations in corporate governance structures shape the ability of firms to enhance shareholder value within Nigeria’s oil and gas sector over the 2018–2024 period. It concentrated particularly on how the number of board members and the proportion of shares held by management affect the market valuation of company shares. The study covered seven publicly quoted oil and gas firms in Nigeria. An ex-post facto design was applied, relying on secondary information obtained from the companies’ published annual reports and audited financial statements. Both descriptive and inferential statistical methods were used to evaluate the data. The descriptive results indicated variability in board size, managerial ownership, and share prices across the firms, reflecting diverse governance practices and ownership structures. Regression analysis revealed that board size had a positive and statistically significant effect on share price, suggesting that larger boards enhance oversight, strategic decision-making, and investor confidence. In contrast, managerial ownership exerted a negative and significant effect on share price, implying that high concentration of managerial shares may lead to entrenchment, reduced board independence, and diminished shareholder value. These findings underscore the dual role of governance structures in shaping corporate performance, highlighting that while effective boards promote wealth maximization, excessive managerial control can undermine it. The study recommends that oil and gas firms optimize board composition, limit concentrated managerial ownership, and strengthen corporate governance frameworks to safeguard investor interests and enhance market valuation.