CORPORATE GOVERNANCE AND CASH HOLDINGS OF MANUFACTURING COMPANIES IN NIGERIA

Abstract

Purpose: The study examined the effect of corporate governance on cash holding by using observation from 2012 to 2015 from five Nigerian quoted Manufacturing Companies. To achieve this goal the following factors on cash holdings were examined: Board’s compensation, female board members, board’s size, board’s ownership, board’s educational level and board’s age.Methodology: The secondary data used were taken from companies websites, annual reports and financial statements. Multiple regression model based on panel data analysis was applied to assess the aforementioned relationship and their significance were determined.Results: The achieved findings indicated that presence of female board members, boards educational level, board compensation and board’s age (working experience) have positive influence on cash holding Board’s size and board’s ownership have negative influence on cash holding. The study further identified board’s ownership as a determinant of cash holding in Nigerian manufacturing companies. Hence, the higher the interest of directors in acquisition of shares of a company, the more the cash holding of that company.Unique contribution to theory, practice and policy: The study recommends a yearly review of the dividend policy of the manufacturing companies to improve the dividend payout as an encouragement to shareholders.