The Nigerian Code of Corporate Governance and Financial Performance of Deposit Money Banks in Nigeria

Abstract

This study evaluates the implications of the Nigeria Code of Corporate Governance on the financial performance of Nigeria Deposit Money Banks from 2015 to 2024. The research specifically examines the role of board size as a primary governance mechanism in mitigating fraud and attracting investment. The scope of the study is delimited to a ten-year period, focusing on a purposive sample of ten banks with international licenses selected based on data availability, reported fraud incidence, and institutional performance. Utilizing an ex post facto and analytical research design, the study relies on secondary data sourced from the Nigeria Deposit Insurance Corporation (NDIC) and annual financial reports. The Auto Regressive Distributed Lag (ARDL) model was employed to analyze panel data, capturing both short-run and long-run dynamics between board size and performance variables. Financial performance is measured using market capitalization. Findings indicate that board size has a statistically significant effect on all selected performance indicators. Specifically, variations in board size significantly influenced market valuation, this result highlights the importance of effective board composition in strengthening oversight, enhancing fraud control, and boosting investor confidence. The study concludes that adherence to governance provisions, particularly an optimal board size, is vital for sustainable growth in the Nigerian banking sector. It recommends that regulators and management maintain efficient board structures with relevant expertise, promote transparency, and conduct periodic evaluations to sustain financial performance and investor trust.