The Effects of Board Size on Financial Performance of Banks: A Study of Listed Banks in Nigeria

Uwuigbe, O. R. and Fakile , A. S. (2012) The Effects of Board Size on Financial Performance of Banks: A Study of Listed Banks in Nigeria. International Journal of Economics and Finance, 4 (2). pp. 260-267. ISSN 1916-9728

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Abstract

A critical review of the Nigerian banking system over the years shows that one of the problems confronting the sector has been that of poor corporate governance. In an attempt to investigate the linkage between corporate governance and financial performance of banks, this study contributed to the existing literature by assessing the effect of size of boards on the performance of banking sector in a developing economy like Nigeria. This study made use of a range of data drawn from the Nigerian Stock Exchange fact book (2008), which contains information on board size and the performance proxies. Regressing performance on board size, it was observed that banks with board size below 13 are more viable than those with board size above 13. The study further observed that banks with larger boards recorded profits lower than those with smaller boards. Therefore, this study concludes that there is a significant negative relationship between board size and bank financial performance with a t- value of -1.977 and a p- value of 0.053. This is because, increase in board size occurs with increase in agency problems (such as director free-riding) within the board and the board becomes less effective. However, the paper recommends a smaller board size for better financial performance and to reduce the problem of free-rider of banks in Nigeria.

Item Type:	Article
Uncontrolled Keywords:	Corporate governance, Board Size, Performance, Banking Sector, Nigeria
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HG Finance
Divisions:	Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User:	Mrs Hannah Akinwumi
Date Deposited:	08 May 2017 11:38
Last Modified:	08 May 2017 11:38
URI:	http://eprints.covenantuniversity.edu.ng/id/eprint/8104

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