Abstract

This study examines the impact of board structure on corporate financial performance in Nigeria. It investigates
the composition of boards of directors in Nigerian firms and analyses whether board structure has an impact on
financial performance, as measured by return on equity (ROE) and return on capital employed (ROCE). Based
on the extensive literature, four board characteristics (board composition, board size, board ownership and CEO
duality) have been identified as possibly having an impact on corporate financial performance and these
characteristics are set as the independent variables. The Ordinary Least Squares (OLS) regression was used to
estimate the relationship between corporate performance measures and the independent variables. Findings from
the study show that there is strong positive association between board size and corporate financial performance.
Evidence also exists that there is a positive association between outside directors sitting on the board and
corporate financial performance. However, a negative association was observed between directors’ stockholding
and firm financial performance measures. In addition, the study reveals a negative association between ROE and
CEO duality, while a strong positive association was observed between ROCE and CEO duality. The study
suggests that large board size should be encouraged and the composition of outside directors as members of the
board should be sustained and improved upon to enhance corporate financial performance.

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