ABSTRACT

This study investigated the relationship between corporate governance structures and firm financial performance in the Nigerian banking industry. Other objectives tested include, to examine the relationship between board size andfinancial performance, to investigate ifthere is a significant difference in thefinancialperformance ofbanks withforeign directors and banks, to appraise the effect ofthe proportion ofnon- executive directors on the financial performance of banks in Nigeria, to investigate ifthere is any significant relationship between directors’ equity interest and the financialperformance ofbanks in Nigeria among others. Pearson's Correlation coefficient and regression were employed to analyse the work. The results showed that there is no significant relationship between Board size andfinancialperformance ofbanks in Nigeria, there is no significant difference in the means of the financial performance ofNigerian banks with foreign directors and banks withoutforeign directors. The relationship between the proportion of non-executive directors and the financial performance ofNigerian banks is not significant. The research recommends that the efforts to improve corporate governance shouldfocus on the value ofthe stock ownership ofboard members, since it is positively related to both future operating performance and to the probability of disciplinary management turnover in poorly performing banks. Proponents of board independence should note with caution the negative relationship between board independence andfuture operatingperformance. Also, banks should be allowed to experiment with modest departures from the current norm of a “supermajority independent” board with only one or two inside directors.