THE INFLUENCE OF CORPORATE GOVERNANCE MECHANISMS ON THE FINANCIAL PERFORMANCE OF QUOTED FAST-MOVING CONSUMER GOODS (FMCG) COMPANIES IN NIGERIA

Abstract

This study examines the influence of corporate governance mechanisms on the financial performance of quoted fast-moving consumer goods (FMCG) companies in Nigeria. An ex- post facto research design was employed, focusing on 31 quoted FMCG companies listed on the Nigerian Exchange as of December 31, 2023. Using purposive and judgmental sampling techniques, data were collected from the audited financial reports of three selected companies over a ten-year period (2014–2023) and analyzed with descriptive and panel least squares regression techniques. The findings reveal a significant negative relationship between board composition and financial performance, suggesting that a higher proportion of non-executive directors enhances performance. Board independence shows a positive but insignificant relationship with financial performance, indicating its potential role in improving oversight. Additionally, board diversity exhibits a significant negative relationship, highlighting the role of increased female representation in curbing unethical practices. To improve corporate governance and financial performance, the study recommends increasing non-executive directors to 60% of the board, ensuring at least 15% non-independent board members, and achieving a minimum of 60% female representation. These measures aim to enhance governance structures and financial outcomes in Nigeria's FMCG sector.