IMPACT OF CORPORATE GOVERNANCE MECHANISM ON THE FINANCIAL PERFORMANCE OF LISTED INSURANCE COMPANY IN NIGERIA

This study investigates the impact of corporate governance mechanisms on the financial performance of listed insurance companies in Nigeria from 2013 to 2023. Utilizing panel data analysis, the research employs several estimation techniques, including Ordinary Least Squares (OLS), Pooled OLS (POLS), Random Effects (RE), and Fixed Effects (FE) models. The dependent variable is the logarithm of Return on Assets (LOGROA), a proxy for financial performance, while the independent variables are board independence (BOI), audit committee independence (ACI), board size (BSIZE), ownership structure (OWN), and firm size (FZ) as a control variable. The Hausman test and Breusch-Pagan Lagrangian multiplier test, suggest that the Fixed Effects model is the most appropriate for this analysis. The Fixed Effects model results reveal that board independence (coefficient: 0.2373211, p- value: 0.000), audit committee independence (coefficient: 0.00464, p-value: 0.000), board size (coefficient: 0.01128, p-value: 0.000), ownership structure (coefficient: 0.07989, p- value: 0.000), and firm size (coefficient: 0.23732, p-value: 0.000) all have a positive and statistically significant impact on the financial performance of listed insurance companies in Nigeria. The findings reveal that larger board sizes, higher levels of board independence, greater audit committee independence, and more concentrated ownership structures have significant positive effects on the financial performance of listed insurance companies in Nigeria. These results are consistent with the predictions of agency theory and stakeholder theory, highlighting the importance of effective corporate governance mechanisms in mitigating agency conflicts, enhancing oversight, and promoting stakeholder interests. Based on the study's findings, several recommendations are proposed to strengthen corporate governance practices in the Nigerian insurance industry. These include establishing guidelines for optimal board sizes, increasing the proportion of independent directors, enhancing audit committee independence, and encouraging concentrated ownership structures while protecting minority shareholders' interests. Implementing these recommendations can contribute to improved financial performance, better risk management, and long-term sustainability in the Nigerian insurance sector.