EFFECT OF CORPORATE GOVERNANCE ON FINANCIAL PERFORMANCE OF QUOTED HEALTHCARE FIRMS IN NIGERIA

Abstract

This study examines the effect of corporate governance on the financial performance of quoted healthcare firms in Nigeria. The specific objectives include determining the effect of board composition, board independence, and board committees on the return on equity (ROE) of these firms. Employing an ex-post facto research design, the study utilizes secondary data from the annual reports of seven listed healthcare companies in Nigeria over the period 2014-2023. The financial performance is measured by ROE. Grounded in Agency theory, this study investigates the relationship between corporate governance mechanisms and financial performance. while corporate governance is proxied using board composition, board independence, and board committees. The study uses descriptive statistics and Ordinary Least Squares (OLS) regression to establish the relationships between these variables. The findings reveal that all three aspects of corporate governance have statistically significant positive effects on ROE. Specifically, diverse and skilled board composition, greater board independence, and effective board committee functioning are associated with higher returns on equity. These results suggest that healthcare firms in Nigeria can enhance their financial performance by improving their corporate governance structures. The study concludes by recommending that these firms focus on enhancing board diversity and expertise, increasing the number of independent directors, and ensuring effective board committee operations. Future research could explore the impact of corporate governance on other financial indicators to provide a more comprehensive understanding of its role in firm performance.