IMPACT OF CORPORATE GOVERNANCE ON BANKS MARKET VALUE IN NIGERIA

CHAPTER ONE

1.1…

1.2 Statement of the Problem

There is no gainsaying that the present economy deserves a sound, stable and better banking performance following the causative factors, such as unethical and unprofessional practices, poor management quality among others which contributed to low level of bank performance and sometimes lead to failure of bank. This has caused many researches into deliberation on the problem case; Fatimoh (2011) performed a chi-square operation in analyzing 200 questionnaires distributed and also performed a cross sectional data analysis using return on capital employed, current ratio, debt ratio, dividend cover and retention ratio. Adegbami, Ofoegbu and Fasanya (2011) performed a pooled time-series OLS on corporate governance, inflation, interest rate, broad money supply and banks performance as considered variables for a period of thirty years. Bubbico, Giorgino and Monda (2012) performed also a cross sectional econometric analysis for a period of twenty years using corporate governance index, ownership concentration, ROA, sales growth, market capitalization index and Tobin’s Q as the variables for their model. Akingunola, Adekunle and Adedipe (2013) performed an OLS econometric analysis on a time series data for thirty-five years using banks’ health, liquidity and profitability as variables for its model. In anticipation to fill the gap of research in this course, the researcher has decided to acknowledge the problems and create an objective in solving these problems.

1.3     Objectives of the Study

The major objective of this study is to investigate the impact of corporate governance on banks’ market value in the Nigerian Stock Market. Other specific objectives are as follows;

a. Examining the effect of the corporate board size on the banks’ market value in the NSE.

b. Examining the effect of the corporate board composition on the banks’ market value in the NSE.

c. Examining the effect of the numbers of Audit meeting held annually on the banks’ market value in the NSE.

1.4     Research Questions

The following research questions were put up to help in carrying at this study

1. To what extend does corporate board six affect bank’s market value in the Nigerian stock exchange.
2. How does corporate board composition affect banks’ market value in the Nigerian stock exchange
3. To what extend doe the numbers of audit meeting held annually affect banks’ market value in the Nigeria stock exchange.

1.5     Statement of Hypotheses

The following hypotheses were formulated to help in carrying out this study

Ho1: Corporate board size does not affect banks’ market value in Nigeria.

Ho2: Corporate board composition does not affect banks’ market value in Nigeria.

Ho3: Number of audit meetings held annually does not affect banks’ market value in Nigeria.

1.6     Scope of the Study

This study encompasses all the Nigeria banks operating in the Nigeria stock exchange market (NSE) and also practice corporate governance within their banking practice. The number of years attribute for this scope will be twenty (20) years i.e from 1995–2014.

1.7     Significance of the Study

This study will help banks maximize the benefits of corporate governance as regards to its impact on banks market value. All interested groups like shareholders, employees, investors, credits, governments etc will benefit immensely from this study.