Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Eghosa Godwin Inneh, Adebukola Olubunmi Ayoola, Chris Ehiobuche
{"title":"Corporate governance quality, corporate life cycle and investor confidence in commercial banks: Evidence from Nigeria","authors":"Tajudeen John Ayoola, Omoneye Olufunke Olasanmi, Eghosa Godwin Inneh, Adebukola Olubunmi Ayoola, Chris Ehiobuche","doi":"10.21511/bbs.18(3).2023.12","DOIUrl":null,"url":null,"abstract":"A dominant strand of literature advances a positive association between corporate governance quality and investor confidence. However, the corporate life cycle may influence the relationship. Therefore, this study investigated the moderating role of the corporate life cycle in the association between corporate governance quality and investor confidence in the Nigerian banking industry. Corporate governance quality was proxied using a composite measure of board characteristics comprising board size, board meeting, independence, and board gender diversity, while investor confidence was proxied using the price-earnings ratio. Secondary data were obtained from the audited annual financial statements of 12 banks from 2006 to 2021. The study adopted a pooled regression model based on the results of Hausman, and the Breusch and Pagan Lagrangian multiplier test. The results showed that corporate governance quality positively and significantly impacted investor confidence at the introduction (coef = .318, p = 0.017) and decline (coef = 383, p = 0.011) phases of the life cycle. Banks at the introduction and decline phases of the life cycle were characterized by a narrow resource base, low profitability, and higher risky investments sufficient to attract investor confidence. The study concludes that corporate governance quality enhanced investor confidence at the introduction and decline phases of the banks’ life cycle.","PeriodicalId":53480,"journal":{"name":"Banks and Bank Systems","volume":null,"pages":null},"PeriodicalIF":0.0000,"publicationDate":"2023-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Banks and Bank Systems","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.21511/bbs.18(3).2023.12","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"Social Sciences","Score":null,"Total":0}
引用次数: 1
Abstract
A dominant strand of literature advances a positive association between corporate governance quality and investor confidence. However, the corporate life cycle may influence the relationship. Therefore, this study investigated the moderating role of the corporate life cycle in the association between corporate governance quality and investor confidence in the Nigerian banking industry. Corporate governance quality was proxied using a composite measure of board characteristics comprising board size, board meeting, independence, and board gender diversity, while investor confidence was proxied using the price-earnings ratio. Secondary data were obtained from the audited annual financial statements of 12 banks from 2006 to 2021. The study adopted a pooled regression model based on the results of Hausman, and the Breusch and Pagan Lagrangian multiplier test. The results showed that corporate governance quality positively and significantly impacted investor confidence at the introduction (coef = .318, p = 0.017) and decline (coef = 383, p = 0.011) phases of the life cycle. Banks at the introduction and decline phases of the life cycle were characterized by a narrow resource base, low profitability, and higher risky investments sufficient to attract investor confidence. The study concludes that corporate governance quality enhanced investor confidence at the introduction and decline phases of the banks’ life cycle.
期刊介绍:
The journal focuses on the results of scientific researches on monetary policy issues in different countries and regions all over the world. It also analyzes the activities of international financial organizations, central banks, and bank institutions. Key topics: -Monetary Policy in Different Countries and Regions; -Monetary and Payment Systems; -International Financial Organizations and Institutions; -Monetary Policy of Central Banks; -Organizational Structure, Functions and Activities of Central Banks; -State Policy and Regulation of Banking; -Bank Competitiveness; -Banks at the Financial Markets; -Bank Associations and Conglomerates; -International Payment Systems; -Investment Banking; -Financial Risks and Risk Management in Banks; -Capital and Ownership Structure, Bankruptcy and Liquidation, Mergers and Acquisitions of Banks; -Corporate Governance and Goodwill; -Personnel Management in Banks; -Econometric, Statistical Methods; Econometric Modeling of Bank Activities; -Bank Ratings.