International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue VIII, August 2019 | ISSN 2454–6186

Corporate Governance Indicators and Their Effects on Firms’ Value

Waheed Solagbade OLADEJI, Elizabeth Oyebola AGBESANYA
Department of Accountancy, The Polytechnic, Ibadan, Nigeria

Abstract:-The paper examined the effects of corporate governance indicators on firms’ value and for in-depth analysis made use of secondary data obtained from the published annual reports and accounts of 20 quoted companies on the Nigeria Stock Exchange for Eight financial years -2009 to 2016.The collected data were analyzed using least square regression t – test statistic at 5% level of significance with the aids of Statistical Package for Social Sciences (SPSS). The study showed that positive relationship exists between corporate governance indicators represented by board size, executive compensation, financial disclosure and transparency and profitability as measure of firms’ value. The study therefore suggests that steps should be taken for mandatory compliance with the code of good corporate governance while an effective legal framework that specifies the rights and obligations of a firm, its directors and other stakeholders should be developed.

Keywords: Corporate governance, Stakeholders, Firms value, Board Size, Executive Compensation.

I. INTRODUCTION

The directors of the company must always make decisions objectively in the best interest of the company’s business and the shareholders. They have the responsibility to run the company successfully and bring in profit for the shareholders, they have to do this ethically within the framework of laws and regulations that governs the running of a company.
Corporate governance exists to protect the shareholders of a company. It also aims to preserve the reputation of the company and its business against any fraudulent act committed by its directors and officers. An enforced corporate governance provides a structure that, at least in theory, works for the benefit of everyone concerned by ensuring that the enterprise adheres to accepted ethical standards and best practices as well as to formal laws.
Thus, the concept indicates rules and regulations that ensure that a company is governed in a transparent and in an accountable manner such that the firm survives and meets the expectations of its shareholders, creditors and other stakeholders.