Board Composition and Quoted Deposit Money Banks Profitability in Nigeria
Abstract
The study evaluated the influence of board composition and profitability of deposit money banks in Nigeria over the period of 2010 - 2019. The study employed secondary data gotten from annual financial reports of 14 sampled quoted manufacturing firms. The study employed the panel stationarity test, panel regression, panel cointegration, error correction modeling, and causality. In the long run, the study observes that the board composition of the various deposit money bank is moderate and imbalanced; this can be seen from the lopsided and adverse relationship it has on the various measures of profitability despite its significant implications on them. This is most noticeable as it was observed that the board size and board independence are adversely related to firm profitability and show a negative and significant relationship to the return on assets and firm market value while displaying a positive and significant relationship with return on equity. Board member gender shows a positive and significant relationship with return on assets and firm market value while showing negatively and insignificantly relate to return on equity. Conclusively, it can be seen that overall, the level of board composition is mediocre and the significance level of the employed dimensions of board composition shows that quoted deposit money banks in Nigeria have better profitability in terms of their return on equity than in view of their return on assets and firm market value. Also, the study recommends that policymakers need to provide adequate regulation on the determination of corporate governance of the directors of listed companies; this will reduce the negative effect of ownership concentration for directors and the overbearing influence of directors in annual general meetings.
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