THE MODERATING EFFECT OF FIRM AGE ON THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study investigates the moderating effect of firm age on the relationship between corporate governance mechanisms and the financial performance of listed deposit money banks in Nigeria. A correlational research design is adopted to examine the influence of the variables of the study. The population of the study comprises Deposit Money Banks (DMBs) listed on the Nigerian Exchange (NGX) Group as at December 31, 2024, totaling thirteen (13) banks. A census sampling technique is employed, allowing the entire population to serve as the sample size. Secondary data are obtained from the published annual reports of the listed banks covering the period 2015–2024. Financial performance is measured using Return on Assets (ROA), while corporate governance variables include board size, board composition, board diversity, audit committee size, and managerial ownership, with firm age introduced as a moderating variable. Data analysis involves the Hausman test guiding model selection. The study finds that board size has a positive but insignificant effect on ROA, while board composition shows a significant positive effect.
Board diversity and managerial ownership showed insignificant negative effects, whereas audit committee size demonstrated a significant negative influence on bank performance.
Firm age significantly moderates the relationships between board composition and audit committee size with ROA but does not moderate the effects of board size, board diversity, or managerial ownership. The study concludes that the effectiveness of corporate governance mechanisms varies across banks depending on their age and recommends strengthening board composition quality, optimising audit committee size, and integrating firm age into governance policies to enhance financial performance.