MODERATING ROLE OF FAMILY OWNERSHIP ON THE RELATIONSHIP BETWEEN MONITORING MECHANISMS AND FINANCIAL PERFORMANCE OF LISTED INDUSTRIAL GOODS COMPANIES IN NIGERIA

Abstract

This study is aimed at examining the moderating role of family ownership on the
relationship between monitoring mechanisms and financial performance of listed industrial
good companies in Nigeria. Monitoring mechanism is proxy by board independence, audit
committee size, audit committee independence, and audit committee meetings, while
financial performance is represented by return on assets. Agency theory was used to anchor
the variables used in the study. The population of the study comprised the thirteen (13)
industrial good companies listed on the Nigeria exchange (NGX) group and a total of nine
(9) firms were used as sample of the study. The study used secondary source of data,
collected from published annual reports of sampled firms for a period of ten (10) years
spanning from 2014 to 2023. The data obtained was analyzed using the multiple regression
technique. The study revealed that board independence and audit committee meetings have
negative and insignificant effect on financial performance. While audit committee size was
positive and insignificant on financial performance, audit committee independence had a
negative and significant effect on financial performance of listed industrial good companies
in Nigeria. The study also found that family ownership moderates the relationship between
audit committee size and financial performance negatively. Finally, family ownership
moderates the relationship between audit committee independence, meetings and financial
performance positively. Based on the findings, the study that recommends enhancing the
expertise of audit committee attributes, prioritizing the quality of independent directors,
and ensuring effective rather than frequent committee meetings. It also recommends
improved governance transparency in family-owned firms, mitigation of family influence
on audit structures, and stronger regulatory oversight through qualitative monitoring
assessments.