Corporate Governance Practices and Financial Performance of Deposit Money Banks in Nigeria

Abstract

This study investigates the corporate governance practices and financial performance of Deposit Money Banks (DMBs) in Nigeria over the period 2014 to 2023. The study adopted an ex-post facto research design, drawing on annual report data from nine purposively selected DMBs that exhibited below-average profitability metrics and elevated regulatory non-compliance. Panel data analysis employing Ordinary Least Squares (OLS) regression, Hausman specification tests, descriptive statistics, and correlation analysis was conducted using EViews software. Three financial performance outcomes were examined: return on assets (ROA), return on equity (ROE), and earnings per share (EPS). Results reveal a strong model fit for ROA (R² = 0.989, F(6, 7) = 899.01, p < 0.001), indicating that board gender diversity and corporate size significantly and positively influence ROA, whilst contravention penalties exert a significant negative effect. The ROE model (R² = 0.138, F(6, 93) = 4.54, p < 0.001) confirms that board size, board gender diversity, and corporate size positively influence equity returns, whilst executive compensation and contravention penalties have negative effects. The EPS model (R² = 0.364, F(6, 93) = 2.80, p = 0.011) shows that board size and board gender diversity positively influence earnings per share, whilst executive compensation and contravention penalties exert negative effects. The study concludes that robust corporate governance practices particularly board gender diversity, appropriate board size, and regulatory compliance are critical determinants of financial performance in Nigerian DMBs. Policymakers and bank management should prioritise board composition reform, transparent executive compensation, and a culture of governance accountability to drive sustainable performance.