This paper investigates the effect of corporate board characteristics on performance of microfinance banks in Nigeria. The study rationale is to ascertain how management of microfinance banks in Nigeria can enhance their performance through effective and efficient use of board of directors. Specifically, the study assesses the effect of board independence and board gender diversity on returns on assets and liquidity. longitudinal research design was used. The technique of sampling employed is simple random technique and Taro Yamane’s formula used to determine the sample size at 284. Secondary data gotten from examined financial position of the chosen licensed microfinance banks in Nigeria between the five years period of 2015 and 2019. Pilot study was employed to test the reliability of the instrument. The result from the tested hypotheses reveals a substantial and positive correlation among board independence and return on assets of microfinance banks. The gender diversity has significant and negative influence on profit on assets of microfinance banks. Furthermore, the result on liquidity reveals a positive and significant relationship amidst board independence, gender diversity and liquidity of microfinance banks. However, it is observed from the study that women representation on boards of microfinance banks is still very low.
Abdullahi, H., & Valentine, B. (2009). Fundamental and ethics theories of corporate governance. Middle Eastern Finance and Economics, 1(6), 88-96.
Acha, I. A. (2012). Microfinance banking in Nigeria: Problems and prospects. International Journal of Finance and Accounting, 1(5), 106-111.
Adams, R., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291-309.
Adebayo, O. S., Olusola, A. G., & Abiodun, O. F. (2013). The relationship between corporate governance and organizational performance: Nigerian listed organizations experience. International Journal of Business and Management Invention, 2(9), 1-6.
Akbar, A. (2014). Corporate governance and firm performance: Evidence from textile sector of Pakistan. Journal of Asian Business Strategy, 4(12), 200-207.
Babar, H. Z., & Zeb, G. (2011). CAMELS rating system for banking industry in Pakistan: Does CAMELS system provide similar rating as PACRA system in assessing the performance of banks in Pakistan? Master’s thesis, Pakistan: Umea School of Business, Umea University.
Barber, B. M., & Odean, T. (2001). Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment. Quarterly Journal of Economics, 116(8), 261-292.
Beasley, M. S. (1996). An empirical analysis of the relation between the boards of director composition and financial statement fraud. Accounting Review, 71(4), 443-465.
Beasley, M., Carcello, J., Hermanson, D., & Lapides, P. (2000). Fraudulent financial reporting: Consideration of industry traits and corporate governance mechanisms. Accounting Horizons, 14(4), 441-454.
Bebeji, A., Mohammed, A., & Tanko, M. (2015). The effect of board size and composition on the financial performance of banks in Nigeria. African Journal of Business Management, 9(16), 590-598.
Bolton, B. (2010). Corporate governance and firm performance. Journal of Corporate Finance, 14(3), 257-273.
Bonn, I. (2004). Board structure and firm performance: Evidence from Australia. Journal of the Australian and New Zealand, 10(1), 14-24.
Branco, M. C., & Lucia, R. L. (2007). Positioning stakeholder theory within the debate on corporate social responsibility. Electronic Journal of Business Ethics and Organisation Studies, 12(1), 5-15.
Brennan, N., & McCafferty, J. (1997). Corporate governance practices in Irish companies. Irish Business and Administrative Research, 18(3) 116-135.
Bronson, S. N., Carcellor, J. V., Hollingworth, C. W., & Neal, T. L. (2009). Are fully independent audit committee really necessary?. Journal of Accounting and Public Policy, 28(4), 265-280.
Burke, R. J. (2000). Company size, board size and the number of women directors. In R. J. Burke and M. C. Mattis (eds). Women on corporate boards of directors: International challenges and opportunities, 157-167.
Byrnes, J. P., Miller, D. C., & Schafer, W. D. (1999). Gender differences in risk taking: A meta-analysis. Psychological Bulletin, 125(5) 367-383.
Campbell, K., & Minguez-Vera, A. (2008). Gender diversity in the boardroom and firm financial performance. Journal of Business Ethics, 83(3), 435-451.
Carter, D. A.‚ Simkins, B. J., & Simpson‚ W.G. (2003). Corporate governance‚ board diversity‚ and firm value. The Financial Review‚ 38(6), 33–53.
尼日利亚中央银行。(2006). Code of corporate governance for banks in Nigeria post consolidation. Zenith Economic Quarterly, 1(6), 11-14.
Charreaux, G. (2004). Corporate governance theories: from micro theories to national systems theories. Working Paper of FARGO.
Chenuos, N. K., Mohamed, A., & Bitok, S. K. (2014). Effects of corporate governance on microfinance institutions. European Journal of Business and Management, ISSN 2222-2905
Chin, J., Widing II, R., & Paladino, A. (2004). Influence of resource dependency theory on firm performance, managing the competitive environment. Retrieved from AnANZMAC Web site: smib.vuw.ac.nz:8081/WWW/ANZMAC2004/ CDsite/papers/Chin1.PDF
Croson, R., & Buchan, N. (1999). Gender and culture: International experimental evidence from trust games. American Economic Review, 89(4) 386-391.
Daily, C. M., Dalton, D. R. & Canella, A. A. (2003). Corporate governance: Decades of dialogue and data. Academic Management Review, 28(3), 371-382.
Dalton, C. M., & Dalton, D. R. (2005). Boards of directors: Utilizing empirical evidence in developing practical prescriptions. British Journal of Management, 16(1), 91-97.
Dalton, D. R., Daily, C. M., Ellstrand, A. E. & Johnson, J. L. (1998). Meta-analytic reviews of board composition, leadership structure and financial performance. Strategic Management Journal, 19(5), 269-290.
Dang, R., Nguyen, D. K., & Vo, L.C. (2012) .Women on corporate boards and firm performance: A comparative study. Paper presented at AFFI Conference.
Dar, L. A., Naseem, M. A., Rehman, R. U. & Niazi, G. S. K. (2011). Corporate governance and firm performance: A case study of Pakistan oil and gas companies listed in Karachi stock exchange. Global Journal of Management and Business Research, 11(8), 1-9.
Darmadi, S. (2011). Board diversity and firm performance: The Indonesian evidence. Corporate Ownership and Control, 9(1), 524–539.
De-Andres P., & Vallelado, E. (2008). Corporate governance in banking: The role of the board directors. Journal of Banking and Finance, 32(12), 2570-2580.
Dechow, P. M., Sloan, R. G., & Sweeney A. P. (1996). Causes and consequences of earnings manipulation: An analysis of firms subject to enforcement actions by the SEC. Contemporary Accounting Reset, 13(1), 1-36.
Donaldson, L., & Davis, J. H. (1991). Stewardship theory or agency theory, CEO governance and shareholder returns. Australian Journal of Management, 6(1), 49-65.
Duke ??, J., & Kankpang, K. (2011). Linking corporate governance with organizational performance: New insights and evidence from Nigeria. Global Journal of Management and Business Research, 11(2), 47-57.
Eklund, J. E., Palmberg, J., & Wiberg, D. (2009). Ownership Structure, Board Composition and Investment performance. CESIS Electronic Working Paper Series, Paper no. 172
Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 284-301.
Fang, S., Huang, C., & Huang, S. W. (2010). Corporate social responsibility strategies, dynamic capability and organizational performance. Case of top Taiwan selected bench mark enterprises. African Journal of Business Management, 4(1), 120-132.
Farrell, K. A., & Hersch, P. L. (2005). Additions to corporate boards: The effect of gender. Journal of Corporate Finance, 11(2) 85-206.
Freeman, E. (1984). Strategic management: A stakeholder approach. Englewood Cliffs, NJ: Prentice-Hall.
Geoffrey, O. M. (2015). The effect of corporate governance on the financial performance of microfinance institutions in Kenya. An unpublished thesis submitted to the graduate school, University of Nairobi
Gompers, P. A., Ishii, J. L., & Metrick, A. (2003). Corporate governance and equity prices. Quarterly Journal of Economics, 118(1), 107-155.
Hill, C. W. L., & Jones, G. R. (2004). Strategic management theory, (6thedition). Boston: Houghton Mifflin.
Hill, C., & Jones, G. (2001). Strategic management: An integrated approach (5th edition). Boston: Houghton Mifflin.
Imam, M. O., & Malik, M. (2007). Firm performance and corporate governance through ownership structure: Evidence from Bangladesh stock market. International Review of Business Research Papers, 8(12), 88-110.
Johnson, G., & Scholes, K. (1997). Exploring corporate strategy. Journal of Banking and Finance, 22(6), 371-403.
Jourová, V. (2016). Gender balance on corporate boards, Europe is cracking the glass ceiling. The European Commission. Retrieved from http://ec.europa.eu/justice/gender-equality/files/gender_balance_decision_making/1607_factsheet_final_wob_data_en.pdf Accessed 3 November 2017
Kazmi, A. (2008). Strategic management and business policy (2ndedition). New Delhi: Tata McGraw Hill Publishing Company.
Laffarga, J., Pilar, D. F., & Reguera-Alvarado, N. (2015). Does board gender diversity influence financial performance? Evidence from Spain. Journal of Business Ethics, 141(2), 11-24.
Lawrence, P., & Lorsh, J. (1967). Organization and environment: Managing differentiation and integration. Boston: Harvard University Press.
Letza, S., Sun, X., & Kirkbride, J. (2004). Shareholding versus stakeholding: A critical review of corporate governance. Corporate Governance: An International Review, 12(3), 242-262.
Lincoln, A., & Adedoyin, O. (2012). Corporate governance and gender diversity in Nigerian boardrooms. World Academy of Science, Engineering and Technology, 71(8), 1853–1859.
Lipunga, A. M. (2014). Determinants of profitability of listed commercial banks in developing countries: evidence from Malawi. Research Journal of Finance and Accounting, 5(6), 41-49.
Mazudmer, M. M. M. (2013). Corporate governance practices in Japan: Postcrisis reforms, successive changes and future trends. International Journal of Business, Management and Social Sciences, 4(1), 1-11.
Naveen, K., & Singh, J. P. (2012). Outside directors, corporate governance and firm performance. Empirical evidence from India. Asian Journal of Finance and Accounting, 1(4), 89-103.
Nshimiyimana, Y. C., & Zubeda, M. A. (2017). The influence of economic factors on profitability of commercial banks. International Journal of Management and Applied Science, 3(1), 14–18.
Nuhiu, A., Hoti, A., & Bektashi, M. (2017). Determinants of commercial banks profitability through analysis of financial performance indicators: Evidence from Kosovo. Business: Theory and Practice, 18, 160-170.
Nwaogazi, A. (2010). Are some MFBs micro-finance or misfeasance institutions? Lagos: Daily Trust Newspaper.
Ogbechie, C. (2006). Corporate governance: A challenge for Nigerian banks. Retrieved from http://www.Businessdayonline.com
Okoye, L. U., Adedayo, E. O., Ahmed, A., & Isibor, A. (2017). Corporate governance and financial sustainability of microfinance institutions in Nigeria. IBIMA Conference on Sustainable Economic Growth, Education Excellence, and Innovation Management through vision 2020, pp 4035-4045
Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource dependence perspective. New York: Harper Row
Plessis, J. J., Saenger, I., & Foster, R. (2012). Board diversity or gender diversity? Deakin Law Review, 17(2), 207-249.
Romano, G., & Guerrini, A. (2012). Corporate governance and accounting enforcement actions in Italy. Management Auditing Journal, 27(7), 622-638.
Rusconi, G. (2009). Stakeholder theory and business economics. Economia Aziendale, 2(8), 10-16.
Securities and Exchange Commission. (2003). Code of corporate governance in Nigeria. Lagos: SEC Press
Securities and Exchange Commission. (2011). Code of corporate governance. Lagos: SEC Press.
Shahin, A., & Zairi, M. (2007). Corporate governance as a critical element for driving excellence in corporate social responsibility. International Journal of Quality & Reliability Management, 24(5), 753-770.
Smallman, C. (2004). Exploring theoretical paradigm in corporate governance. International Journal of Business Governance and Ethics, 1(1), 78-94.
Smith, N., Smith, V., & Verner, M. (2006). Do women in top management affect firm performance? A panel study of 2,500 Danish firms. International Journal of Productivity and Performance Management, 55(5), 569-593.
Song, J., & Windram, B. (2004). Benchmarking audit committee effectiveness in financial reporting. International Journal of Audit, 8(1), 195-205.
Stanwick, P. A., & Stanwick, S. D. (2002). The relationship between corporate governance and financial performance: An empirical study. Journal of Corporate Citizenship, 14(8), 35-48.
Sundaram, A. K., & Inkpen, A. C. (2004). The corporate objective revisited. Organization Science, 15(3), 350-363.
Tobias, O., & Themba, M. S. (2011). Effects of banking sectoral factors on the profitability of commercial banks in Kenya. Economics and Finance Review, 1(5), 1–30.
Vishwakarma, R. (2015). Effect of governance on the performance of selected Indian microfinance institutions: An empirical study. European Journal of Business and Management, 7(4), 25-38.
Wahdan, M., & Leithy, W. (2017). Factors affecting the profitability of commercial banks in Egypt over the last 5 year (2011–2015). International Business Management, 11(2), 342-349.
Yasser, Q. R. (2011). Corporate governance and performance: An analysis of Pakistani listed firms. Global Journal of Management and Business Research, 11(1), 2249-4588.
In-Text Citation: (Ehugbo, 2021)
To Cite this Article: Ehugbo, I. (2021). Effect of Corporate Governance Board Characteristics on Performance of Microfinance Banks in Nigeria. International Journal of Academic Research in Accounting Finance and Management Sciences, 11(2), 27-46.
Copyright: © 2021 The Author(s)
Published by Human Resource Management Academic Research Society (www.m.masccom.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode