Corporate governance and value creation of deposit money banks in Nigeria
Abstract
This study examined corporate governance and value creation of deposit money banks (DMBs) in Nigeria. Resource-Based View (RBV)was the theoretical underpinning. The proxies for corporate governance are board size, board composition and audit committee. Understanding these governance attributes provides valuable insights into how firms manage and potentially improve their value. Return on assets is the proxy for value creation. Secondary data from 2013 to 2023 were obtained from the annual reports of five (5) DBMs selected through a purposive sampling technique. The study adopted Unit Root test, Johansen’s Cointegration test and Error Correction Model for the analysis. The major findings of the study revealed that there is a positive and significant effect board composition on return on assets of deposit money banks in Nigeria while a negative and insignificant influence exist between board size and audit committee on return on assets. Hence, the study underscores that an improved board composition as a governance attribute enhances transparency and oversight functions. This directly and positively influence value creation in deposit money banks in Nigeria. Conversely, increase in board size and audit committee has negative and insignificant influence on value creation. The study recommends that DMBs should focus on board quality rather than just size and audit committee because a well composed board with a mix of strong leadership skills, diverse expertise, gender and professional diversity, and strategic governance practices will enhance sustainable shareholders’ value creation.
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References
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