CORPORATE GOVERNANCE MECHANISMS AND PROFITABILITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

The main objective of this study was to examine the effect of corporate governance mechanisms on the profitability of listed deposit money banks in Nigeria. The independent variable being corporate governance mechanism was proxied by board expertise and board gender diversity while the dependent variable being profitability was proxied by return on capital employed. The research design adopted for this study was the ex post facto research as the secondary data were employed. The population of this study was fourteen listed deposit money banks in Nigeria. The method of data analysis employed was the ordinary least square regression analysis and the statistical package employed was SPSS version 21. Based on the analysis of the data, it was found out that board expertise has a positive but insignificant effect on the return on capital employed; board gender diversity has a significant positive effect on return on capital employed of listed deposit money banks in Nigeria. Thus it was concluded that board monitoring mechanisms have significant effect on profitability of listed deposit money banks in Nigeria. Based on this, it was recommended that the management of deposit money banks in Nigeria should not overlook the importance of diverse experiences on their boards despite the lack of statistical significance. Also that listed deposit money banks in Nigeria should actively promote gender diversity on their boards. Encouraging the inclusion of more female directors can lead to broader perspectives, enhanced decision-making processes, and ultimately, improved profitability as proven by this study.

Keywords: Corporate governance mechanism, profitability, return on capital employed, board expertise, board gender diversity.