Effect of Board Characteristics on Market Value of Listed Consumer Goods Firms in Nigeria
DOI:
https://doi.org/10.47604/ijfa.3551Keywords:
Board Characteristics, Board Size, Board Composition, Board Independence, Board Gender, Foreign Board Membership, Board Turnover, Staggered Board, Market ValueAbstract
Purpose: Low market value which recently led to delisting of some companies from the Nigerian Exchange Group can be linked to companies’ ownership structure, board structure or financial structure. This study examined the effect of board characteristics on the market value of listed consumer goods firms in Nigeria, focusing on board size, composition, independence, gender diversity. foreign membership, turnover, and staggered board structure. The study also controlled for the effect of firm size in determining the relationship between board characteristics and market value.
Methodology: An ex-post facto research design was adopted because the study heavily relied on the secondary data extracted from the annual reports of twenty-one (21) listed consumer goods firms in Nigeria, from which sixteen (16) firms were selected as the sample covering the period of 2014-2023. The data were analyzed using the fixed effects panel regression model, chosen based on the Hausman test.
Findings: The findings of the study revealed that the board turnover and staggered board have a positive and statistically insignificant effect on the market value of listed consumer goods firms in Nigeria, while the board composition, board independence, board gender, and foreign board membership have a negative and statistically insignificant effect on the market value of listed consumer goods firms in Nigeria. The board size and firm size were found have a negative and statistically significant effect on the market value of listed consumer goods firms in Nigeria. It was also found that firm size controls the relationship between the board characteristics and the market value of listed consumer goods firms in Nigeria. Based on the findings, the study concluded that board characteristics can be used as a predictor of market value of listed consumer goods firms in Nigeria
Unique Contribution to Theory, Practice and Policy: The study recommended that firms in the consumer goods sector should maintain an optimum board size and prioritize board quality over quantity. Companies should consider adopting a staggered board structure in their articles of association since it appears to have a positive effect on market value. Furthermore, independent directors' activities should be closely monitored to ensure they are not compromised. The competence. experience, and contributions of women and foreign directors should be periodically evaluated to identify and bridge any resource or knowledge gaps. Finally, future research should employ larger samples and longer timeframes to further explore the dynamic relationship between board turnover and firm market value.
Downloads
References
Adebola, A., & Adesanmi, T. (2022). Corporate board structure and investors’ returns of listed insurance firms in Nigeria. Proceedings of the 7th Annual International Academic Conference on Accounting and Finance of the Institute of Chartered Accountants of Nigeria.
Akinwumi, A. A., & Onmonya, L. O. (2025). Board characteristics and firm value: Evidence from listed firms in Nigeria. International Journal of Research and Innovation in Social Science (IJRISS), 9(6). https://dx.doi.org/10.47772/IJRISS.2025.906000114
Ali, F., Aljughaiman, A.A., Almulhim, A.A. (2025). The departure dilemma: Directors’ last working year and firm performance—Do gender differences matter? Humanity Social Science Community, 12, 1049. https://doi.org/10.1057/s41599-025-05428
Arosa, B., Iturralde, T., & Maseda, A. (2013). The board structure and firm performance in SMEs: Evidence from Spain. Investigaciones Europeas de Dirección y Economía de la Empresa, 19(3), 127–135. https://doi.org/10.1016/j.iedee.2012.12.003
Association of Certified Chartered Accountants United Kingdom. (2012). Corporate governance: the board of directors and standing committees. Retrieved on 17 September 2023 from: https://www.accaglobal.com/gb/en/student/exam-support-resources.html
Bawa, J., Suleiman, A.S., & Saidu, H. (2024). Moderating Effect of Free Cash Flow on Board Attributes and Value of Listed Consumer Goods Firms in Nigeria. ANUK College of Private Sector Accounting Journal, 1 (2),
Bebchuk, L. A., & Cohen, A. (2005). The costs of entrenched boards. Journal of Financial Economics, 78(2), 409–433. https://doi.org/10.1016/j.jfineco.2004.12.006
Bendickson, J., Muldoon, J., Liguori, E. W., & Davis, P. E. (2016). Agency theory: Background and epistemology. Journal of Management History, 22(4), 437-449.
Benjamin, D. R., Frawley, H. C., Shields, N., Peiris, C. L., van de Water, A. T. M., Bruder, A. M., & Taylor, N. F. (2023). Conservative interventions may have little effect on reducing diastasis of the rectus abdominis in postnatal women: A systematic review and meta-analysis. Physiotherapy, 125, 68–80. https://doi.org/10.1016/j.physio.2023.02.002
Berle, A. A., & Means, G. C. (1932), The modern corporation and private property, Harcourt, Brace & World, New York.
Bisi, A. (2022, February 28). The Nigerian code of corporate governance 2018: Principle 6, non-executive directors. The Business Day. https://businessday.ng/columnist/article/the-nigerian-code-of-corporate-governance-2018-principle-6-non-executive-directors-2/
Bolton, B., & Park, J. (2021). Board of directors’ turnover and firm performance. In K. M. Hogan, & A. Kostyuk (Eds.), Corporate governance: Fundamental and challenging issues in scholarly research (pp. 35 42).
Byrne, B. M. (2010). Structural equation modeling with AMOS: Basic concepts, applications and programming. 2nd Ed. New York: Routledge Taylor & Francis Group. 396 p.
Chahine, S., & Tohmé, N. S. (2009). Is CEO duality always negative? An exploration of CEO duality and ownership structure in the Arab IPO context. Corporate Governance: An International Review, 17(2), 123–141.
Chen, J. (2021). What is market value, and why does it matter to investors? Retrieved on 16 August 2023 from: https://www.investopedia.com/terms/m/marketvalue.asp
Cremers, M., Litov, L., & Sepe, S. (2017). Staggered boards and long-term firm value, revisited. Journal of Financial Economics, 126(2), 422–444. https://doi.org/10.1016/j.jfineco.2017.09.005
Dalton, D. R., Daily, C. M., Johnson, J. L., & Ellstrand, A. E. (1999). Number of directors and financial performance: , 42(6), 674–686. https://doi.org/10.2307/256988
Dang, R., Nguyen, D. K., & Vo, L. C. (2020). Women on corporate boards and firm performance: Evidence from a transitional economy. Asian Business & Management, 19(1), 42–69. https://doi.org/10.1057/s41291-019-00082-2
Daniela, A. (2009). Gender diversity in the workplace: A literature review. Journal of Gender Studies, 18(3), 231 - 248
Eisenhardt, K.M. (1989). Agency theory: an assessment and review. Academy of Management Review, 14(1), 57 – 74.
Esteban, L. & Miguel, A. G. (2019). Managerial turnover and performance in outside boards: Ownership makes the difference," TEC Empresarial, School of Business, Costa Rica Institute of Technology (ITCR), 13(3), 2-27
Fakile, O. G. &Adigbole, E. A. (2019). Effect of board characteristics on financial performance of quoted information communication and technology companies in Nigeria. Entrepreneurial Journal of Management Sciences, 6 (1), 75 – 85.
Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 301–325. https://doi.org/10.1086/467037
Farhan, N.H.S., Tabash, M.I., Almaqtri, F.A. & Yahya, A.T. (2020). Board composition and firm profitability: Empirical evidence from pharmaceutical industry in India. Journal of International Studies, 13 (3), 180 – 194.
Financial Accounting Standards Board (FASB). (2006). Statement of Financial Accounting Standards No. 157: Fair value measurements (ASC 820). Norwalk, CT: FASB. Retrieved from https://www.fasb.org/home
Gambo, J. S., Terzungwe, N., Okpanachi, J., & Agbi, S. E. (2019). Board independence, expertise, foreign board member and financial performance of listed insurance firms in Nigeria. International Journal of Management, Accounting and Economics, 6(11), 780 - 794.
Giannetti, M., Liao, G., & Yu, X. (2015). The brain gains of corporate boards: Evidence from China. The Journal of Finance, 70 (4), 1629–1682.
Habib, A., Abubakar, Y., & Usman, I. (2020). Board composition, board size and market value of listed industrial goods companies in Nigeria. International Journal of Research and Innovation in Social Science (IJRISS),4 (12), 14 - 19.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate Data Analysis: A Global Perspective: Pearson Education International. New Jersey.
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2022). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) (3 ed.). Thousand Oaks, CA: Sage.
Hillman, A. J., Cannella, A. A., & Paetzold, R. L. (2000). The resource dependence role of corporate directors: Strategic adaptation of board composition in response to environmental change. Journal of Management Studies, 37(2), 235–256. https://doi.org/10.1111/1467-6486.00179
Hirdinis, M. (2019). Capital structure and firm size on firm value moderated by profitability. International Journal of Economics and Business Administration, 7 (1), 174 - 191.
Horne, J.C.V. & Wachowicz, J.M. (2009). Fundamentals of financial management, 13th Edition. Edinburgh Gate-England, Pearson Education Limited.
Ibrahim, M., & Hamza, M. A. (2022). Board diversity and earnings management in publicly listed oil and gas firms in Nigeria. Audit and Accounting Review, 2(2), 49–71. https://doi.org/10.32350/aar.22.03
I.K. Kiptoo, S.N. Kariuki, and K.N. Ocharo (2021) Corporate governance and financial performance of insurance firms in Kenya, 8 (1) , https://doi.org10.1080/23311975.2021.1938350
Investopedia. (2024, April 10). Market value definition. Dotdash Meredith. Retrieved from https://www.investopedia.com/terms/m/marketvalue.asp
Jackling, B., & Johl, S. (2009). Board structure and firm performance: Evidence from India’s top companies. Corporate Governance: An International Review, 17(4), 492–509. https://doi.org/10.1111/j.1467-8683.2009.00760.x
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
Joseph, B., & Ironkwe, U.I. (2022). Board composition and firm performance of quoted commercial banks in Nigeria. GPH-International Journal of Business Management,5 (1), 20 – 40.
Kevin, C., & Antonio, M. V. (2008). Gender diversity in the boardroom and firm financial performance. Journal of Business Ethics, 83 (3), 435 - 451
Khan, M.J., Saleem, F., & Ud Din, S. (2024). Nexus between boardroom independence and firm financial performance: Evidence from South Asian emerging market. Humanities and Social Sciences Communications,11: 590
Kim, J.H. (2019). Multicollinearity and misleading statistical results. Korean Journal Anesthesiol, 72 (6), 558 - 569.
Knyazeva, A., Knyazeva, D., & Masulis, R. W. (2013). The supply of corporate directors and board independence. Review of Financial Studies, 26(6), 1561–1605. https://doi.org/10.1093/rfs/hht020
Kor, Y. Y., & Misangyi, V. F. (2008). Outside directors’ industry‐specific experience and firms’ liability of newness. Strategic Management Journal, 29(12), 1345–1355. https://doi.org/10.1002/smj.701
Mankiw, N. G. (1990). A quick refresher course: Macroeconomics. Journal of Economic Literature, 28(4), 1645–1660.
Marcel, J. J. & Cowen, A. P. (2014). Cleaning house or jumping ship? understanding board upheaval following financial fraud: Research notes and commentaries. Strategic Management Journal, 35 (6), 926–937
McDonnell, M.-H. & Cobb, J. A. (2020). Take a stand or keep your seat: Board turnover after social movement boycotts. Academy of Management Journal, 63 (4), 1028–1053
Munyradadzi, R., MuchemwaI, N., & Chris, W. (2016). Board composition, board size and financial performance of Johannesburg stock exchange companies. South African Journal of Economic and. Management Sciences,19(4),
National Bureau of Statistics. (2024). Quarterly national accounts report Q4 2024. Abuja: Author. Retrieved from https://nigerianstat.gov.ng
Nigerian Exchange Group. (2024). NGX Factbook 2024. Lagos: Author. Retrieved from https://ngxgroup.com
Nicholson, G. J., & Kiel, G. C. (2007). Can directors impact performance? A case-based test of three theories of corporate governance. Corporate Governance: An International Review, 15(4), 585–608. https://doi.org/10.1111/j.1467-8683.2007.00590.x
Nils, D. (2024). Does board turnover matter in competitive industries? MSc Financial Economics Thesis. Erasmus University Rotterdam.
Ogunsola, A. & Awe, A.O. (2023). Board characteristics, institutional ownership and company’s value among quoted consumer goods companies in Nigeria. Fuoye Journal of Accounting and Management, 6 (2),
Okomu (2022) The Okomu Oil Palm Company Plc Report of the Directors, Audited Financial Statements and Other National Disclosures
Peni, E., & Vähämaa, S. (2010). Female executives and earnings management. Managerial Finance, 36(7), 629–645. https://doi.org/10.1108/03074351011050343
Perera, I. S., Ganeshan, J., & Belitski, M. (2021). Underrepresentation of women managers in the boardroom: evidence from the Sri Lankan financial sector.
Permata, I. S., & Alkaf, F. T. (2020). Analysis of market capitalization and fundamental factors on firm value. Journal of Accounting and Finance Management, 1(1), 59–71. https://doi.org/10.38035/jafm.v1i1.12
Peters, G. T. & Fred-Horsfall, F. V. (2024). Gender composition and the market value of listed firms in Nigeria and Kenya. Journal of Accounting Information and Innovation, 10(1), 1 – 14.
Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource dependence perspective. New York: Harper & Row.
Qiang, W., Wong, S.-S., Koh, K. & Tong, Y. H. (2022). Does board turnover enhance firm performance? a contingency approach. Corporate Governance: An International Review, 31 (3), 405-424.
Rafinda, A.,Witiastuti, R., Suroso, A & Trinugroho, I. (2018). Board diversity, risk and sustainability of bank performance: Evidence from India. Journal of Security and Sustainability Issues, 7(4),793-806.
Rashid, A. (2018). Board independence and firm performance: Evidence from Bangladesh. Future Business Journal, 4(1), 34–49. https://doi.org/10.1016/j.fbj.2017.11.003
Ronyastra, M. (2017). The impact of expatriate directors on Indonesian company’s performance. IOP Conference Series: Materials Science and Engineering 273 (2017) 012028. https://doi.org /10.1088/1757-899X/273/1/01202 .
Ruohan, Z., Yanxi, L., & Yun, W. (2021). Multiple large shareholders, control contests, and forced CEO turnover. Emerging Markets Review, 48
Sanda, A., Garba, T. & Mikailu, A.S. (2011). Board independence and firm financial performance: Evidence from Nigeria. African Economic Research Consortium, Nairobi, Kenya.
Shafie, M., Kamilah, A., & Khaw, K. (2015). Corporate governance practices and firm performance: Evidence from Top 100 public listed companies in Malaysia. 7th International Economics & Business Management Conference, 5th & 6th October 2015.
Silvia, A. & Ontonio, A. (2007). Responsible corporate governance: toward a stakeholder board of directors? University of Navarra Working Paper No. 701
Stenzaly, T.O. (2023). The effect of staggered boards on firm value during market shocks. Finance Market Portfolio Management, 37, 457 - 497
Stephen, R. G. (2019). Ownership Structure, Fraud, and Corporate Governance. Wiley Journal of Corporate Accounting & Finance. Available at https://typeset.io/explore/journals/journal-of-corporate-accounting-finance-3j70hpkm
Streamsowers & Kohn (2021) At a glance: Responsibilities of company boards in Nigeria. Retrieved on 12 September 2023 from: https://www.lexology.com/library/detail.aspx?g=3bc7dfac-7215-4fdb-b191-89eb58c31110
Tanthanongsakkun, S., Treepongkaruna, S., and Jiraporn, P. (2023). Carbon emissions, corporate governance, and staggered boards. Business Strategic Environment,32, 769 - 780.
Thakoholwiro, C. & Sithipoueanichguel, J. (2021). Board characteristics and capital structure: evidence from Thai listed companies. The Journal of Asian Finance, Economics and Business, 8(2), 861-872.
Tobin, J. (1969). A general equilibrium approach to monetary theory. Journal of Money, Credit and Banking, 1(1), 15–29. https://doi.org/10.2307/1991374
Thompson, S., Dogarawa, A. B., Bello, A., & Fodio, M. I. (2016). Board characteristics, ownership structure and firm value of listed petroleum companies in Nigeria. Nigerian Journal of Accounting Research, 12(2), 59 -108.
Toyin, I. L. (2017) The Relationship between Corporate Governance and Organizational Performance in Nigerian Companies. Walden Dissertations and Doctoral Studies, Walden University Scholar Works.
Ugwu, C. (2022). Worst performing consumer goods stocks in August 2022. Consumer Goods, Metrics, Ranking. https://nairametrics.com/2022/09/15/worst-performing-consumer-goods-stocks-in-august-2022/
Ujunwa, A. (2012). Board characteristics and the financial performance of Nigerian quoted firms. Corporate Governance: The International Journal of Business in Society, 12(5), 656–674. https://doi.org/10.1108/14720701211275587
Usman, S. O., & Yahaya, O. A. (2023). Effect of board characteristics on firm value in Nigeria. Journal of Economics and Finance, 47 (1), 44 - 60.
Wang, K., Xue, K. K., Xu, J. H., Chu, C. C., Tsai, S. B., & Fan, H. J. (2018). How does a staggered board provision affect corporate strategic change? Evidence from china's listed companies. Sustainability 10:1412. https://doi.org/10.3390/su10051412.
Wong, S., Koh, K., & Tong, Y. H. (2019). Does board turnover enhance firm performance? A contingency approach. Academy of Management Proceedings·
Yahaya, Onipe Adabenege, Board Characteristics and Cost of Capital of Listed Consumer Goods Companies in Nigeria (February 04, 2024). Available at SSRN: https://ssrn.com/abstract=5028900 or http://dx.doi.org/10.2139/ssrn.5028900
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 OTIKO Ugochukwu Nnamdi, ACA, ZUBAIRU Abdullahi Danjuma, PhD, ABDULLAHI Abdullahi Musa, PhD, UCHENNA Clems Ozegbe
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
