The Moderating Effect of Vertical Agency Crisis on the Relationship Between Corporate Governance and Financial Performance in Nigeria

Abstract

This study examines the moderating effect of vertical agency crises on the relationship between corporate governance mechanism and financial performance in Nigeria covering  2013 to 2022. To achieve this purpose, this study used precise proxies for the dependent, independent and moderator variables of interest. Based on a descriptive and ex-post facto research design, this study analyzed a set of panel data sourced from annual financial reports of eighteen (18) consumer goods firms drawn from a population of twenty-five (25) listed consumer goods firms in Nigeria. Mixed effect multi-level regression analysis estimator together with moderated regression analysis technique were employed to test the hypotheses after meeting necessary conditions for obtaining non-spurious least square regression estimates. The findings show that board ownership has a statistically significant relationship with financial performance, but board size, board independence and board gender diversity have insignificant relationship. Further, the findings from this study reveals among others that vertical agency crises have an insignificant moderating effect on the relationship between board independence and financial performance, the moderating effect is significantly positive in relation to board gender diversity for listed consumer goods firms in Nigeria . But for the variable of board size and board ownership, the moderating effect of vertical agency crises was seen to be statistically insignificant. Therefore, on the bases of the findings, this study suggests that managers should focus on mitigating vertical agency crises while concurrently strengthening board independence.