Board Independence Structure and Financial performance: Evidence from quoted Consumer Goods Firms in Nigeria
Abstract
The board of directors is charged with the responsibility of facilitating charges that support the mission of the organization to realize its vision. In the recent past, a number of organizations listed in the Nigerian Exchange Group have collapsed with the board of directors taking the blame. The aim of this study is to empirically explore the relationship between board independence and return on asset. The study adopted ex-post facto research design, this is because it is quantitative research based on positivist paradigm and used deductive reasoning. Data for this study were extracted from annual report of listed consumer goods firms and Nigerian exchange group, spanning from 2010-2020. The data collected were subjected to ordinary least square regression analysis, descriptive statistic, normality test, correlation matric, random effect, co-integration, unit root test and error correction model with the aid of E-view version 12. Empirical evidences from the hypothesis tested indicated that board independent significantly relate to return on asset and recommends that firms should make appointment of independent directors to determinate the appointment of inside executive directors so as to enable the firms to maximally reap the benefits of board independence. Also, independent directors are expected to carry out their duties in line with the specifications and directions of relevant Nigerian laws and codes governing their operations.
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