Corporate Governance And Firm Performance: An Empirical Analysis Of Chinese And Nigerian Companies

Good company management plays great importance in social economic development.Knowing the relationship between corporate governance and firm performance is beneficial toenterprise innovations and policy-making. The thesis is based on corporate governance theoryand50public companies of China Stock Exchange and the Nigerian Stock Exchange, andused multiple regression analysis and least square method to compare the relationshipbetween three corporate governance internal mechanisms (ownership concentrationCONCENT, board size BSIZE, and board composition BCOMP) and two firm performancemeasures (return on equity ROE and profit margin PM). A sample of fifty Chinese andNigerian listed companies each between2005and2009.were examined in this thesis Panelmethodology is used as the method of estimation.Chinese companies’ ROE shows a negative correlation with CONCENT and BCOMP and aninsignificant one with CONCENT, while ROE correlation with BSIZE is positive but notstatistically significant. PM shows a positive and significant correlation with CONCENT andBCOMP, but shows a negative and insignificant relationship with BSIZE. Nigeriancompanies’ ROE shows a positive correlation with CONCENT and BSIZE but insignificantrelationship with BSIZE. There is negative and insignificant correlation with BCOMP. PMalso is negative and has insignificant correlation with CONCENT and BCOMP, while itshows a positive but statistically insignificant correlation with BSIZE.Finally, based on analysis of the results, some countermeasures and suggestions wereproffered to both countries. These include: increased government protection of investors;better information disclosure and restriction of culpable public companies; optimizing theownership structure and governance structure of public companies; a review of the board ofsupervisors system; setting-up of financial supervision system that is consistent withcorporate governance best-practices. These measures lead to more effective corporategovernance and improvement in firm performance.