Abstract:
Corporate scandals across the world, especially in Europe and America, have elicited debate on the effectiveness of corporate governance laws, and also focused the analytical spotlight on the board of directors. The corporate board scrutiny led to the enactment of corporate governance codes in different jurisdictions. The Central Bank of Nigeria, in 2006 responded to this trend by establishing the Code of Corporate Governance for Banks in Nigeria Post Consolidation. Essentially, the code prescribed a maximum board size of twenty, a higher proportion of non-executive directors to executive directors and a minimum of four board meetings in a financial year, among other recommendations. The objective of these recommendations is to improve the effectiveness of the board in promoting bank performance and other corporate governance practices in the Nigerian banking industry. However, the Central Bank of Nigeria blamed corporate governance failure in banks as a principal factor that contributed to the 2008 banking crisis in Nigeria. This revelation raised an important research and policy question on the effectiveness of the Code of Corporate Governance for Banks in Nigeria Post Consolidation, in enhancing bank performance and promoting good corporate governance practices. To fill this important knowledge gap, this study examined: (i) the impact of board size on bank financial performance in Nigeria, (ii) the relationship between the proportion of non-executive directors and bank financial performance in Nigeria and (iii) the impact of number of board meetings on bank financial performance in Nigeria. Ex post facto research design was adopted. Panel data for 5-year period covering 2006 -- 20 10 were collated from secondary sources that included annual reports of banks, the Nigerian Stock Exchange factbooks, the Nigeria Deposit Insurance Corporation annual reports and the Nigerian Stock Exchange daily official list. The pooled Ordinary Least Square Regression model was used to estimate the relationship between these board effectiveness measures and bank performance…
