EFFECT OF CORPORATE GOVERNANCE MECHANISM ON THE FINANCIAL PERFORMANCE OF LISTED PHARMACEUTICAL COMPANIES IN NIGERIA
Abstract
Abstract
This study examines the effect of corporate governance mechanisms on the financial performance of pharmaceutical companies listed on the Nigerian Exchange Group (NGX) between 2020 and 2025. The corporate governance variables investigated include Board Size (BSIZE), Board Independence (NED), and CEO Duality (CEOD). Financial performance was measured using Return on Assets (ROA).
Secondary data was obtained from annual financial statements of five purposively selected firms. Descriptive statistics, correlation analysis, and multiple linear regression were used to analyze the data.
The results reveal that both board size and board independence have a significant positive effect on ROA, while CEO duality has a significant negative effect. These findings highlight the importance of board structure and leadership separation in improving financial performance.
The study concludes that strengthening corporate governance practices is critical for enhancing firm performance in Nigeria’s pharmaceutical sector. Recommendations include maintaining optimal board sizes, increasing the number of non-executive directors, separating the roles of CEO and board chairman, and improving regulatory compliance.
Keywords: Corporate Governance, Board Size, CEO Duality, Board Independence, Return on Assets, Nigerian Exchange Group.
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