CORPORATE GOVERNANCE COMPLIANCE AND FINANCIAL RESILIENCE OF LISTED CONSUMER GOODS FIRMS IN NIGERIA

Abstract

This study examined the effect of corporate governance compliance on the financial resilience of listed consumer goods firms in Nigeria over the period 2010–2025.
Specifically, the study examined the effects of board effectiveness, audit effectiveness, and ownership monitoring mechanisms on financial resilience. The study was anchored on agency theory and organisational resilience theory. The study adopted a correlational research design within the positivist paradigm. The population comprised 19 listed consumer goods firms on the Nigerian Exchange Group, and census sampling was employed. Secondary data were obtained from firms’ annual reports and financial statements. Financial resilience was measured using a composite financial resilience index constructed through principal component analysis (PCA) from six financial indicators: return on assets, operating cash flow to total assets, liquidity, interest coverage, inverse leverage, and sales growth. Corporate governance compliance was measured using board effectiveness, audit effectiveness, and ownership monitoring mechanisms indices, constructed by aggregating their respective governance indicators. Data were analysed using Prais–Winsten Panel-Corrected Standard Errors (PCSE) regression. The findings revealed that board effectiveness and audit effectiveness had positive and statistically significant effects on financial resilience, while ownership monitoring mechanisms had a positive but statistically insignificant effect. The overall model was statistically significant as supported by the F-statistics probability value. The study concluded that strengthening board and audit oversight mechanisms could enhance the financial resilience of listed consumer goods firms in Nigeria. It recommended stronger board effectiveness, audit oversight, and active shareholder monitoring to improve firms’ capacity to withstand financial pressures.