Corporate Governance Variables and Performance of Manufacturing Firms in Nigeria

Abstract

This study examines the impact of corporate governance on the performance of manufacturing firms in Nigeria. Panel data were obtained from the audited annual reports of twenty (20) listed manufacturing firms covering the period 2020–2024. Corporate governance was proxied by board size and board diversity, while firm performance was measured using return on assets (ROA). The Panel Least Squares estimation technique was employed to analyze the relationship between the variables, following the confirmation of stationarity at levels using the Im, Pesaran, and Shin (IPS) and Levin, Lin, and Chu (LLC) unit root tests. The empirical results reveal that both board size and board diversity exert a negative and statistically significant effect on firm performance. These findings suggest that excessively large and highly independent boards may impede effective decision-making and reduce operational efficiency in Nigerian manufacturing firms. Based on the results, the study recommends that the selection and nomination of board members should be conducted through a transparent and rigorous process that emphasizes not only competence and qualifications but also an optimal balance in board composition to enhance firm performance.