CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE OF FOOD AND BEVERAGE FIRMS IN RIVERS STATE

Abstract

This study examined the relationship between corporate governance and financial performance of quoted manufacturing firms in Port Harcourt Metropolis. Secondary data from Nigerian Stock Exchange Fact Book of 2015 and the organization’s financial records for the period of 2011 - 2015 were used. The study employed the use of Pearson Product Movement Correlation and descriptive statistics with the aid of SPSS version 21. The result of the analysis shows that a positive but insignificant relationship exists between board size and net profit margin and return on assets of quoted manufacturing firms in Nigeria. This implies that the larger the board size, the higher the net profit margin of the firm. It is believed that large board size will make better decisions that will enhance the performance of firms. More so, it was observed that a negative significant relationship exists between duality of CEO and net profit margin and return on assets of quoted manufacturing firms. Furthermore, board composition was found to have a positive significant relationship with net profit margin and return on assets of quoted manufacturing firms. This means that the larger the number and caliber of non-executive directors, the better for the firm as such increase’s the impact on the board’s decision making and consequently increase financial performance. Finally, it was observed that organizational culture significantly moderates the relationship between corporate governance and performance of quoted manufacturing firms in Port Harcourt Metropolis. Hence for quoted manufacturing firms to successfully improve their performance, they may wish to have an enlarged board size to enhance the quality of their decision-making. The practice of holding dual executive positions, such as Chairman/CEO, is fast fading as it is increasingly perceived to violate corporate governance, composition of the board of directors of the firms should be made more of non-executive directors to have more influence on boards decisions.