Corporate Boards and Firm Value: Evidence from Nigeria

Abstract

Aim: The basis for the formation of the corporate board is to, among others, give strategic direction to the firm, monitor the activities of the salaried agents and reduce the likelihood of disincentive to investment. The aim of this study is to examine the efficacy of corporate boards in relation to the value of firms listed in Nigeria. Study Design and Methodology: It is a cross-sectional research design that empirically examined the influence of board mechanisms and Tobin’s Q of firms listed on the Nigerian Stock Exchange. The study used annual data of a panel sample of 85 firms from 2004 through 2023, It applied a Generalized Least Squares (GLS) econometric technique. Place and Duration of Study: This study examined the role of the boards of firms listed on the Nigerian Stock Exchange between 2004 and 2023. Results: The findings argued in favour of smaller boards, increased board independence and higher market capitalisation since they showed significant improvements in value of the firms in the sample. The findings imply that smaller boards that are highly independent tend to have better corporate governance and thus, superior firm value. Conclusion: In conclusion, the results advocate that the regulatory agencies and boards of the studied firms enact policies that will encourage minimum board sizes that are sufficiently independent.