The Determinant of Corporate Governance on Profitability of Selected Firms in the Food and Beverages Industry in Nigeria

Abstract

At its core, the goal of a firm is to create sustainable profitability. And corporate governance should work to ensure this steady increase in corporate performance. Understanding the determinant of corporate governance on firm profitability has warranted a special attention over time by different fields of scientific knowledge. This study was aimed to explore the relationship between corporate governance and profitability of firms, employing eight food and beverages firms listed in the Nigerian Stock Exchange from 2005 to 2014. The data were analyzed using basic descriptive and inferential statistics with Ordinary Least Square multiple regression in a panel data setting. The results revealed that at 5 per cent level of significance, Board size have positive relationship with return on equity. However, Board skills and competence have negative relationship with return on equity, while Board gender diversity results indicated positive relationship with return on equity. it can be argued that the empirical results support the contention that corporate governance has a positive relationship with profitability of firms. The study recommends among other things, that Nigerian food and beverages firms should adopt effective corporate governance practice as a panacea to firm growth and survival. Further research using corporate governance processes and profitability will not only add value in explaining performance of firms, but also add value to the academic literature.