ABSTRACT

This study investigated the effect of corporate governance on organizational performance with interest on deposit money banks in Nigeria. Five research questions and five hypotheses guided the study. A survey design was adopted. The population of the study comprised 456 top senior management staff of the nineteen (19) commercial banks. The sample of the population were 213 respondents which was arrived at through the application of Taro Yameni formula. A structured questionnaire on a 5-point rating scale was used for data collection. The questionnaire was hand dropped by the researcher with the help of six research assistants to the respondents and subsequently hand picked after an agreed upon period. Data analysis was primarily done using descriptive and inferential statistics. Under descriptive statistics; mean, maximum, minimum and standard deviations were used and under inferential statistics: correlation analysis and stepwise regression analysis were employed. Two models (ROA=0.448+0.240X1+0.134X4 - 0.395X5 and ROE=0.602+0.264X1 +0.140X4 -0.476X5 ) for predicting organisational performance based on corporate governance were developed by the study. Further findings of the study revealed that block ownership and board size are the significant measures of corporate governance that have positive effects on the performance of commercial banks in Nigeria. However, the positive effects of these two corporate governance measures on organisational performance were negatively affected by the size of banks. Also institutional ownership and board independence were not found significant in explaining the effect of corporate governance on performance of commercial banks. Based on the above findings,the study concluded that block ownership of banks is dominant among Nigerian commercial banks, while the level of products and services diversification of the banks is not large enough to justify their large sizes. The study therefore recommended among others, for increased involvement of institutional investors as well as the need to improve the level of board independence as away forward in improving the quality of corporate governance and performance of Nigerian commercial banks.