Abstract:
This study examined the relationship between board independence and firm financial
performance, using data of varying sample size (ranging from 89 firms for regression
to 205 firms for descriptive analysis) obtained from the Nigerian Stock Exchange for
the period 1996 through 2004. The key results were that share ownership was highly
concentrated inNigeria, and this structure tended to engender board structureswith close
family affiliations in which the chief executive officers (CEOs) were activemembers of
audit committees.While family affiliation of board members was found to support firm
growth, we found evidence that audit committee membership of chief executives hurt
firm performance. We also found that foreign chief executives performed better than
their local counterparts. These results suggested the need for Nigerian firms to adopt
better corporate governance mechanisms in order to make the boards of directors more
independent, avoid unnecessary intervention of CEOs in important committees, and in
that way aid financial performance.
